Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — ENVIRONMENT

Garston (Inner City Problems)

Mr. Loyden: asked the Secretary of State for the Environment if he will pay a visit to Garston for the purpose of investigating the problems of inner city areas.

The Secretary of State for the Environment (Mr. Peter Shore): I have no plans to do so.

Mr. Loyden: Does my right hon. Friend agree that the inner area studies have indicated that curative action is necessary in many of the inner areas, and may I urge him to look at the need for preventive action in areas such as Garston? Is he aware that there is a high degree of obsolescence there and great housing stress and that we look for his assistance, in co-operation with Liverpool, in dealing with the problem? In those circumstances, may I ask—

Mr. Speaker: Order. Questions are getting longer and longer. The hon. Gentleman has asked two. I shall let him complete his third because he is first on the Order Paper, but I do not want him to be too much of an example.

Mr. Loyden: Will my right hon. Friend arrange with his Department to visit the area and look at the points I have raised?

Mr. Shore: I can assure my hon. Friend that the problems of Garston are not unknown to my Department or to me. On the two main points that have been raised, of course I agree that the inner Liverpool study has revealed the seriousness

of the situation and the need for early and effective action. I also wholly agree that it is important for local authorities, and, indeed, the Government, to be aware of the areas where problems are not as advanced and serious as they are in some of our inner cities but where they could become so if proper preventive action is not taken.

Mrs. Chalker: Will the Minister pay particular attention to some of the suggestions that have been made for creating new small industries on the edge of inner city areas, because they could bring relief and could also take up some of the Government advance factory building if it was apportioned off?

Mr. Shore: Yes. I agree that the rôle of small firms, particularly in inner cities, is important. Local authorities, which have in the past in general been somewhat insensitive about the needs of small firms, are now becoming much more aware of the important part that they can play.

Mr. McNamara: Does the Minister realise that, apart from the cities that took part in the inner area studies, there are a great number of smaller cities such as Hull which have all these problems? Is it not important that when my right hon. Friend publishes his White Paper he should pay attention to such areas, which have all the problems of obsolescence and lack of housing that exist in city centres?

Mr. Shore: I am aware of the problem. We must face the fact that there are throughout the country, in all cities and large towns, areas of decay and problems that certainly need tackling. If we are to do anything effective, and if we are to deal with the really major problems affecting our inner cities, we must be extremely selective in what we do.

Mr. Peter Walker: As the Minister has published a summary of inner city studies—which, I am sure he will agree, contains many constructive suggestions and useful analyses—and as he is considering a statement of policy on this matter, would it not be a good idea if the House were able to debate the report on inner city studies before he comes to a final conclusion?

Mr. Shore: That is entirely a matter for the Leader of the House. I should


be only too willing to have a debate on this matter, but I hope that the time between now and my initial statement on inner cities will not be long.

Mr. Parry: Is my right hon. Friend aware that in inner areas in some regions, particularly in my constituency, unemployment has reached 40 per cent. and that the construction industry in Merseyside has the highest level of unemployment of any region in Great Britain? What plans does my right hon. Friend have to help alleviate unemployment in inner areas and to reduce unemployment in the construction industry?

Mr. Shore: I am very much aware of the intense problems facing Liverpool, which has difficulties as great as any city in the country. I am also aware of the great importance of helping to deal with unemployment in that area. I hope my hon. Friend will agree on a point that is also relevant elsewhere—that Liverpool and Merseyside are part of a special development area, yet there is within that area an unacceptable differential of high unemployment in the inner part of Liverpool which my hon. Friend knows about. I have a feeling that we must look not only to regional policies but to intraregional policies to tackle these problems effectively.

Mr. Heseltine: Is the right hon. Gentleman aware that while he is considering his review of these problems the situation on Merseyside is rapidly getting a great deal worse as a result of many policies of his Government? Is he aware that bankruptcies among small firms on Merseyside are at a record level, that the Merseyside housing programme is rapidly declining and that unemployment in the area is rising? What are the Government going to do about these urgent problems?

Mr. Shore: The hon. Gentleman can ask my right hon. Friend the Chancellor of the Exchequer about the general economic recovery. He will be saying something about the state of the economy very soon. I do not agree with what the hon. Gentleman said about housing and the development of housing programmes. We made Liverpool a housing stress area for council house building and it is coming forward with a substantial programme of new building.

Local Authority Mortgages

Mr. Durant: asked the Secretary of State for the Environment how much money was lent out by local authorities for mortgages in 1974–75; and how much has been allocated for 1977–78 at 1976 survey prices.

The Minister for Housing and Construction (Mr. Reginald Freeson): At 1976 survey prices, reported lending in 1974–75 totalled £686 million; the allocation for 1977–78 is £100 million. At out-turn prices, the 1974–75 lending amounted to £536 million; in 1977–78, with the building society support arrangements which my right hon. Friend recently announced, the figure will be £273 million. In additon, building societies are lending about £1,000 million a year generally on older properties and to poorer families.

Mr. Durant: Is the right hon. Gentleman aware that there has been a drop of about 84 per cent. in the funds available to local authorities to lend for house purchase and improvement? Does he realise that this particularly affects young married couples, especially those looking for older properties? Would not the Government be wiser to shift resources away from so much council building towards more grants and mortgages for young people?

Mr. Freeson: The hon. Gentleman is comparing like with unlike. Council house building is the construction of housing. Mortgage facilities, with which the hon. Gentleman is rightly concerned—and so am I—are related to existing properties, which are not necessarily the same thing in terms of resources, except that they may percolate through the market so that we get new building at the other end of the scale. Local authority mortgage lending has been cut back in order to protect new house building, and investment and other resources are being put into rehabilitation. It is not correct to suggest that the percentage cut-back in mortgage lending is also affecting our controls over Section 105 spending on improvements and rehabilitation.

Mr. James Lamond: Has my right hon. Friend had an opportunity to read the recommendations from the Oldham Metropolitan Borough Council on this


matter in which the council expresses concern at the cut-backs and asks that he gives special consideration to areas which have a large proportion of older terrace-type houses which young people frequently wish to buy but mortgages for which are difficult to obtain from building societies? Will he pay regard to this suggestion in his allocation of money?

Mr. Freeson: Certainly, and not only in respect of allocation for local authority mortgages but also in our talks with the building society movement. In seeking to establish and carry forward the support arrangements which my right hon. Friend announced recently, we have paid particular attention to areas with the worst problems and older properties. In the past few years—and this is a continuing process—there has been a considerable increase in building society lending down market, which has reached something like 23 per cent. of total lending going on pre-1919 dwellings, and nearly 20 per cent. of lending being to families with below-average incomes.

Mr. Rossi: Does the information that the right hon. Gentleman has given about the cut-back from £700 million to £100 million over a period of three years, for the reasons that he has given, mean that the Labour Party has abandoned its pledge in the October 1974 General Election to increase—not to reduce—local authority mortgage lending?

Mr. Freeson: I must ask the hon. Gentleman to await the outcome of the policy initiative that is still in the pipeline.

House Purchase Assistance

Mr. Douglas-Mann: asked the Secretary of State for the Environment if he will ensure that public funds committed to helping house purchasers are distributed evenly as between prospective or recent purchasers and elderly people without mortgages on the one hand and people who have bought their homes some years ago on the other.

Mr. Freeson: Matters such as these are being considered as part of the housing policy review.

Mr. Douglas-Mann: Is my right hon. Friend aware that, according to the latest family expenditure survey, 40 per cent. of owner-occupiers do not have a mortgage

and that they mostly have smaller incomes than those with mortgages? About one-third have incomes of less than £35 a week and receive no public help, while 40 per cent. of those with mortgages have incomes of more than £100 a week. Is there not a strong case for redistribution, if only within the owner-occupied sector?

Mr. Freeson: I accept what my hon. Friend has said in principle, and I believe that this area of owner-occupation has been overlooked far too much by both sides of the House. There is a considerable element of poverty and difficulty among poorer owner-occupiers, especially the elderly. I think and hope that we shall be able to do something to assist them in future policy developments.

Mr. McCrindle: Would not the greatest assistance to every owner-occupier come from stability in borrowing rates? Will the right hon. Gentleman therefore consider, rather than pressing building societies to reduce interest rates now only to have to put them up again later, keeping the rates where they are, on the undertaking that they will not go up unless, for example, the minimum lending rate were to reach 15 per cent.?

Mr. Freeson: I think that I would be wise merely to take note of that unusual suggestion. It is not true to say that any particular policy in this area would assist all owner-occupiers. My hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) indicated that 40 per cent. of owner-occupiers have no mortgage. It was to that area that he directed his question and I directed my reply.

Mr. Heseltine: Can the right hon. Gentleman confirm that he is not considering a reduction in the rates of tax relief on mortgage interest?

Mr. Freeson: My right hon. Friend the Prime Minister gave a very satisfactory reply to that question yesterday. I endorse it and have nothing to add to it.

Office Accommodation (Local Authority Disposals)

Mr. Peter Walker: asked the Secretary of State for the Environment if he will take action to see that when local authorities are able to dispose of office accommodation they are free to dispose


of it at the best possible price and on a freehold basis if they wish to do so.

The Under-Secretary of State for the Environment (Mr. Guy Barnett): Local authorities are already free to dispose of surplus office accommodation on the best terms available for leases of up to 99 years. If there is a special case for disposal on a freehold basis or a longer leasehold agreement, I am prepared to consider it.

Mr. Walker: In my county, which the hon. Gentleman knows about because he recently met a delegation from it, we have a large number of properties to dispose of because of officers moving into new properties. Can he arrange a quick decision and confirm that, if it is in the interests of the county's ratepayers to dispose of these properties on a freehold basis, quick agreement will be forthcoming from the Government?

Mr. Barnett: I am always willing to consider cases. If the authorities concerned submit cases, I shall look at them.

Mr. Lipton: Might I probe this matter a little further? Is it not time to clip or liberate the fussy planning powers of local authorities? Was it not better in the old days when we had shops, offices and workshops which added colour and variety to the residential areas in which they were situated? I remember that when I was a lad there was a felt-monger's round the corner between two private houses and no one minded.

Mr. Speaker: Order. We believe that the hon. Gentleman was a lad once, but we do not need to hear about it.

Mr. Barnett: I agree with my hon. Friend if he is arguing against too rigid zoning in planning laws. I suggest that that does not relate directly to the original Question, since the Community Land Act will give local authorities greater planning flexibility.

Empty Houses (Leasing)

Sir B. Rhys Williams: asked the Secretary of State for the Environment if he will now seek to amend the law in regard to housing to permit owners of vacant property to enter into leases for fixed periods, with appropriate safeguards for the tenants.

The Under-Secretary of State for the Environment (Mr. Ernest Armstrong): No, Sir. We have invited comments on our Rent Act review consultation paper. We are not at present proposing any changes in the law.

Sir B. Rhys Williams: Is the Minister aware that there are tens of thousands, if not hundreds of thousands, of empty properties which owners would be willing to let if they could be sure of gaining vacant possession after a reasonable length of time? Is it not a fact that many people do not need life-long security of tenure and would be content with a form of lease that gave them security for a year or two?

Mr. Amstrong: Any empty property is of great concern to us at this time of desperate housing need. I must reassert to the House the fact that, following our Rent Act consultation paper, we believe that security of tenure for the tenant in his home must be maintained.

Mr. Costain: When will the Minister learn that the fact that houses are kept empty causes considerable distress? Will he visit the area which I have the honour to represent, because I can show him many houses there which landlords want to rent to tenants but cannot do so because of the stupid doctrines of the Rent Act?

Mr. Armstrong: I am sorry to see the hon. Gentleman so depressed. Our experience, however, is that when rent restrictions or security of tenure are relaxed there are still empty properties and there is still a decline in the private sector market.

Mr. Grocott: I share my hon. Friend's concern about empty properties, but will he have a word with his right hon. Friend the Secretary of State for Defence about the 13 per cent. of Ministry of Defence houses which are now empty, particularly in the area of Marchington in Staffordshire, where many such properties have been empty for four years? Will he ensure that the sound advice on housing management that is available in the Department of the Environment is conveyed to the Secretary of State for Defence?

Mr. Armstrong: Yes, I shall see that that information is conveyed to my right hon. Friend.

Mr. Rossi: Does not the Minister recognise that if the Labour Party continues with the threat of interfering with this sector it will discourage people from letting? There is historical evidence that when there was a relaxation accommodation disappeared from the market because the Labour Party pledged itself to bring back controls the moment it was able to do so. Is that not the genesis of our troubles?

Mr. Molloy: Tell him about Rachman!

Mr. Armstrong: If the hon. Gentleman is as concerned with the desperate need for housing as he appears to suggest, he should not make party political points but should help to bring about more progress in this area. All our experience was that the private sector continued to decline even when the so-called expert remedies advocated by the hon. Gentleman were in force.

Building Society Mortgages (Inner City Properties)

Mr. George Rodgers: asked the Secretary of State for the Environment what evidence he has that building societies are withholding mortgages from properties in the inner areas of towns and cities.

Mr. Freeson: Cases have been referred to the Department in respect of a small number of towns. These have been resolved or are still being examined in the context of replacement lending. I hope to see a steady improvement through developing local liaison between building societies and local authorities in the context of renewal strategies.

Mr. Rodgers: Would my right hon. Friend agree that the system of drawing a line round inner town or inner city zones and the refusal to provide mortgage facilities amount to an appalling state of affairs? Not only does this deprive those at the lower end of the income scale of the opportunity to purchase older-type property, but it frustrates the general desire for urban renewal.

Mr. Freeson: I accept what my hon. Friend says. Indeed, I would go further. I shall not go into the matter in detail, but I believe that the way out of this situation lies in much closer liaison—

this is already being developed in some areas—between local authorities and local levels in the building society movement, so that much greater information is available from the local authorities to the building societies about their intentions in terms of prospective housing action areas, general improvement areas and the like. Much of this problem has shown itself to be evident in terms of the red-lining.

Mr. Budgen: Will the Minister confirm that the principal objective of building societies is to safeguard the investments of those who deposit money with them and not to go in for social engineering?

Mr. Freeson: I do not for a moment suggest that building societies should go in for social engineering, but I am glad to say that in the recent past—and I hope that this will happen in the future—more and more members of the building society movement have become involved in the social consequences of their housing policies. The figures I gave earlier suggest that the movement is becoming effective in the areas to which they are prepared to lend money.

Mr. Frank Allaun: Is not the catastrophic reduction in the number of mortgages hitting the poorer families? Is it not a fact that many local authorities have little confidence in the new scheme put forward by the building societies because the authorities regard the old one as a complete flop? I can name local authorities where only one-quarter of the mortgages promised have been granted to the people who need them. In the circumstances, therefore, is not a requirement from the Government to the building societies desirable?

Mr. Freeson: In certain detailed respects my hon. Friend is correct, but I reject his general denunciation of the arrangements. The figure of lending under the old scheme—the £100 million scheme as it came to be known—climbed to £132 million. It was not a failure. The money was lent at an increased rate in the latter months of the scheme. The new arrangements will involve an allocation—not a general undertaking—of specific funds at local level to particular local authorities amounting to £176 million. It is no use ignoring these facts, because


this is what we want to see happening in the older areas. There is an increased rate of lending which must be encouraged still further by the building societies down-market. We wish to see that happening, and we intend to encourage it in co-operation with the Building Societies Association.

Domestic Water Charges

Mr. Goodhart: asked the Secretary of State for the Environment what plans he has to charge for the use of water in domestic households by the introduction of meters.

The Minister of State, Department of the Environment (Mr. Denis Howell): None.

Mr. Goodhart: Does the Minister recognise that the introduction of water meters into the average household would lead to an enormous increase in administrative costs?

Mr. Howell: The capital cost of fitting water meters in all domestic households would amount to between £650 million and £950 million. It would cost something between £6.50 and £9.50 to service and read such meters. I cannot believe that such an imposition is possibly justified.

Mr. Arthur Jones: Will the Minister confirm that companies now have the right to meter supplies? Will this matter be dealt with in the Government's forthcoming White Paper?

Mr. Howell: I have just said that we have no intention of encouraging the provision of meters in domestic households. Under the legislation passed by the previous Administration, authorities have the right to go in for metering, but I am glad to say that the Secretary of State has the right to prevent them from so doing if he wishes to do so.

Improvement Grants

Mr. Ridley: asked the Secretary of State for the Environment what proposals he has for increasing the rateable value means test limit of £175 per annum, both for improvement grants and for grants to improve the homes of disabled persons.

Mr. Armstrong: I have no proposals for immediate increases. But if a suitable

legislative opportunity occurred I should be prepared to consider sympathetically the case for giving housing authorities wider powers to pay grants to the disabled in hardship cases.

Mr. Ridley: I am grateful for that answer. I shall try to introduce a Ten-Minute Bill straight away. Does not the Minister agree that, if we must have a means test, rateable value is not a good form of means test because it is no way of measuring the ability of the disabled and others to pay for improvements to houses? I am grateful to the hon. Gentleman for offering the facilities for legislation, and I shall seek an early opportunity to bring in a Bill.

Mr. Armstrong: We have had some correspondence on this subject dealing with the situation in various parts of the country. Our judgment is that the rateable value and the limits we have placed have enabled limited resources to be applied where they are most needed. We see no case for a general increase.

Mr. Ashley: Is my hon. Friend aware that some local authorities are reluctant to give grants for improving the homes of disabled people on the deplorable principle that the weakest cannot shout the loudest? Would he care to reexamine the record of these local authorities to ascertain what he can do to change both their minds and their attitudes?

Mr. Armstrong: We are sympathetic to the needs of the disabled, and we are considering ways of meeting the great need in that area.

Mr. Sainsbury: Does the Minister agree that a two-thirds slump in the number of building improvement grants is not very welcome? Is he aware that it is having an effect on employment in the construction industry and that the possibility of maintaining our existing housing stock in a satisfactory condition calls for something further than having no further intention at the present time of doing something about it?

Mr. Armstrong: Yes, it is true that there has been a reduction, but originally a great amount of the money was going to those who were well able to pay for their own improvements. When cash is limited it is necessary for us to get our priorities in order, and the rateable value limit does just that.

House Purchase and Improvement Finance (Leeds)

Mr. Albert Roberts: asked the Secretary of State for the Environment what consideration he will give to increasing the allocation of funds for house purchase and improvement loans to Leeds City Council for the year 1977–78.

Mr. Armstrong: I can offer no immediate prospect of an increase in the mortgage lending quota for Leeds City Council.

Mr. Roberts: Will my hon. Friend bear in mind that Leeds is the second largest city in the country outside London with 30,000 low-value back-to-back houses in the inner city and that £59 per head is measly when the average location throughout the country is £200? Surely this is a situation that warrants a reconsideration of the position in Leeds.

Mr. Armstrong: Yes, I am well aware of the figures that my hon. Friend has put before the House. As he knows, we have been in correspondence with the Leeds City Council. Population was not the only basis on which we made the allocation. We are concerned that when money is lent by the local authority it should go to the priority categories—for example, those who are at the lower end of the market and those who want to buy older property. These are the people who are least able to get loans from building societies.

Sir B. Rhys Williams: Instead of adding to the already incomprehensible hotch-potch of housing subsidies, would it not be better to increase personal allowances to wage-earners who are also householders, thereby taking the sensible step of subsidising families and not houses?

Mr. Armstrong: That is a matter for my right hon. Friend the Chancellor of the Exchequer. I have no doubt that he will take into consideration what has been said.

Mr. Joseph Dean: Is my hon. Friend aware that his answer to my hon. Friend the Member for Normanton (Mr. Roberts) will not be very well received in Leeds by younger people who are attempting to buy older houses and set up home for the first time, or by those who are awaiting improvement grants?

Is he aware that by any known criteria—for example, size of city, size of population and size of housing problem related to population—Leeds appears to have been discriminated against? Will my hon. Friend give an assurance that the situation will be reviewed as quickly as possible?

Mr. Armstrong: I can assure my hon. Friend that there has been no discrimination against Leeds. I shall present the figures to him to prove that that is not so. When we are allocating resources of this sort, we want them to go where they are most needed. I assure my hon. Friend that Leeds has had a fair allocation.

Local Government Reorganisation

Mr. Grocott: asked the Secretary of State for the Environment if he will make a statement on the extent to which the 1972 reorganisation of local government has achieved its objectives up to the present.

Mr. Shore: I cannot answer for the objectives of the Tory reorganisation, but the present structure of local government is widely criticised. We must seek ways of improving it.

Mr. Grocott: I welcome my right hon. Friend's reply, but does he agree that even at this stage we can try to rescue something from the shambles of the 1972 reorganisation by establishing a proper inquiry into the reorganisation to determine, first, how much the reorganisation has cost so far; secondly, what were the major mistakes that were made; and, thirdly, who was responsible for them? Does he agree that it is almost impossible these days to discover anyone who is prepared to defend the reorganisation? Does he accept that those who were responsible—

Mr. Speaker: Order. It is not fair to the rest of the House when a supplementary question goes on so long.

Mr. Grocott: rose—

Hon. Members: Sit down.

Mr. Speaker: I was not asking the hon. Gentleman to sit down. I was asking him to come to a conclusion.

Mr. Grocott: My conclusion, Mr. Speaker, is to ask my right hon. Friend


whether he agrees that those responsible for the reorganisation have a great deal to answer for to the ratepayers.

Mr. Shore: I think that the length of my hon. Friend's supplementary question merely reflects a widespread feeling about the unsatisfactory state of affairs following the 1972 Act. I do not think we need any post-mortem to determine who was responsible. We shall study carefully the performance of local government since reorganisation and try to draw the proper conclusions from that.
To turn to the two main points made by my hon. Friend, I am considering whether we can, as he put it, rescue something from what has been done. As my hon. Friend knows, in the context of the broader consideration of devolution we issued a Green Paper, a consultation paper, and we shall be receiving views on it during the next few weeks and months.

Mr. Stephen Ross: May I ask the right hon. Gentleman not to have too much regard for further commissions and inquiries? Will he allow local authorities which wish to reorganise themselves to get on with the job and put their proposals to him, and will he receive them favourably? My own constituency would dearly love to be an all-purpose authority. If we put the proposals to the Minister, will he consider them gratuitously and let us get on with the job?

Mr. Shore: I do not want to overexcite expectations. I made a number of comments in a speech at Harrogate about a month ago, and they reflect the general drift of my thinking and the lines on which we are at present examining the problem.

Mr. Madel: As some of the criticism of reorganisation is from those who believe that some of the units created were too large, may we take it from the right hon. Gentleman that in no circumstances will he have English regional government, which would create even larger units?

Mr. Shore: I see, in terms of most services, why the hon. Gentleman would express that view. I share it. I should not wish to see many of the personal services and other services that are handled by local government going to

larger and more remote local government units. However, there are certain powers of government and local government, and certain agencies such as those concerned with health and water, that have no democratic control. It may well be that they would be appropriate to a form of regional government.

Mr. Gerry Fowler: Does my right hon. Friend recognise that valour is sometimes preferable to discretion and that there are many who believe that a single tier of local government, a regional tier that is democratic, controlling functions already exercised undemocratically at regional level, might be the best form of local government we can obtain, whatever the long-term implications within the EEC?

Mr. Shore: I believe that I have already conceded that point. If I did not make it clear in a previous reply, I confirm that this is an area in which the possibility of change in the direction of a new pattern of local government may be sensibly explored.

Mr. Heseltine: Does the right hon. Gentleman appreciate that, of all the Ministers in this Government, he is the least likely to over-excite expectations? Does he understand that the single greit,2st cause for complaint about the rising cost of local government has been the fact that prices have increased by 69·5 per cent. since 1974 when his Government were elected? The other increasing burden on local authorities is that the House continually imposes additional financial responsibilities on local authorities without producing the financial resources to carry them out.

Mr. Shore: I think that the House will judge that as a pretty tame intervention and excuse by a spokesman of a party that is responsible for the present unsatisfactory form of local government. I remind the hon. Gentleman of what his predecessor as spokesman, the hon. Member for Aylesbury (Mr. Raison), had to say when speaking on local government matters. Only a fortnight ago the hon. Gentleman said:
It must be admitted that the 1970–74 Tory Government did not get either local government or health reorganisation right. Certainly, during the time I was Shadow spokesman on the Environment I found it increasingly difficult to defend local government reorganisation.

Inner City Areas

Mr. Hooley: asked the Secretary of State for the Environment what response he proposes to make to the submission by Sheffield and five other major provincial cities on the inner cities problem.

Mr. Shore: I hope to discuss the submission with a deputation from the authorities concerned as soon as this can be arranged.

Mr. Hooley: Does my right hon. Friend agree that, whatever machinery or resources are provided to deal with this problem, it is important that the great cities should be firmly in control of the administration of those resources and that they should not be handed to some external non-elected body?

Mr. Shore: Yes. I am not in favour of handing over even important redevelopment projects to external agencies, with the caveat, which I think my hon. Friend will accept, that if a local authority wishes to bring in some form of additional assistance—I hesitate to say what it might be—it is up to it to do so and we shall not stand in its way.

Mr. Blenkinsop: Is my right hon. Friend aware of the great anxiety which is being expressed by many authorities outside this group of cities lest we define the problem of urban areas too narrowly?

Mr. Skinner: Do not forget Bolsover.

Mr. Shore: I have already made plain to the House that there are quite serious urban problems in nearly all our cities. I remind my hon. Friend that, given the available resources, if we are to make any serious impact we must concentrate on particular areas.

Mr. Grist: asked the Secretary of State for the Environment from what areas he is proposing to divert resources to help urban areas.

Mr. Hodgson: asked the Secretary of State for the Environment what additional resources he is planning to spend on improving inner city areas.

Mr. Shore: These are amongst the questions we are considering in the present review of inner city policy.

Mr. Grist: I did not quite hear what the Secretary of State said.

Mr. Shore: These are amongst the questions we are considering in the present review of inner city policy.

Mr. Grist: It perhaps was not worth hearing. However, will the Secretary of State—[An HON. MEMBER: "Tuck your shirt in."] It is a blue flag. After that rather bright beginning I will start again. Does that mean that the Secretary of State is waiting for the Budget on 29th March before making any announcement? Does he agree that, unless he produces some reasonable figures to back up what the Government have said about helping the urban areas in inner cities, it will have been a cruel deception?

Mr. Shore: I am not intending to make a statement before the Budget, but I am intending to make one fairly quickly afterwards. Of course, resources will have to be found if we are to help the inner cities. However, I am not in a position to anticipate any precise statement at present as to where exactly those resources are coming from.

Mr. Hodgson: Is the Secretary of State aware that since 1972 inner city study groups have produced over 40 different reports on inner city problems? When can we hope to have some action as opposed to constant reports and rising expectations which are never fulfilled?

Mr. Shore: I entirely agree that there has been a totally inadequate action programme to help the inner cities for many years past. I am at present inheriting studies that were set up in 1972 by the right hon. Member for Worcester (Mr. Walker), who was then Secretary of State for the Environment. They are useful to have, but, my goodness, they have taken a long time. Since I have been Secretary of State for the Environment I have laid deliberate emphasis and stress on tackling inner city problems. I hope shortly to be able to tell the House my conclusions on the studies.

Mr. Heffer: When my right hon. Friend gives his report to the House on the question of the inner cities, will he indicate whether part of that report will be on what the Government intend to do about derelict docklands in cities such as Liverpool, London and elsewhere? Secondly,


what help will be given to assist the development of small businesses in inner cities where such businesses have been destroyed because of redevelopment?

Mr. Shore: My hon. Friend will understand that at this stage I cannot easily anticipate what will be in my statement. In my speech at Bristol, however, I indicated some of the lines of approach that we were pursuing. I shall send my hon. Friend a copy if he has not already received it.

Mr. Anthony Grant: asked the Secretary of State for the Environment whether he intends to publish any interim report on inner area problems.

Mr. David Hunt: asked the Secretary of State for the Environment whether he intends to publish any interim report on inner area problems.

Mr. Shore: No, Sir. I expect to announce the outcome of the review as a whole next month.

Mr. Grant: The Secretary of State referred earlier to the fact that these vast reports were initiated by my right hon. Friend the Member for Worcester (Mr. Walker). May I remind the right hon. Gentleman that he and his Government have been in office for three years and that they are supposed to do something about this? Secondly, is he aware that the House wants an opportunity to debate these important matters, which concern hon. Members on both sides? Instead of giving the time-honoured answer that this is a matter for his right hon. Friend the Leader of the House, will the Secretary of State say that he will press the Leader of the House to provide time to debate these matters?

Mr. Shore: With regard to the hon. Gentleman's first point, these reports take time. The right hon. Member for Worcester (Mr. Walker) established the studies in 1972 but the reports became available only in December last year. Summaries have only recently been circulated, and we have yet to publish the full reports. We hope to do so shorly. I do not wish to make a conventional response with regard to the hon. Gentleman's other point. I would willingly have a debate, and I shall take up this matter with my right hon. Friend. I cannot do more than

that because my right hon. Friend also has other claimants upon the time of the House.

Mr. Spearing: In reviewing the inner city problem, did my right hon. Friend see the report of the debate on docklands on Monday during which I asked for £100 million investment by the Government in docklands to be diverted from existing new town development? If this were possible and were done, would it not mean that there would be no reduction in what already exists in those towns, and no overall increase in Government expenditure, but development where everyone wants it?

Mr. Shore: I not only read the debate on docklands but I was able to listen to the last half of it. I noted the point made by my hon. Friend, who has a close connection with dockland. At this stage I would not make a close link between the needs expenditure of the inner cities and particular sources where those funds can be found. We have to operate within the PESC limits, but clearly, if we are to help the inner cities, resources will have to come from other programmes.

Private Rented Housing

Mr. Adley: asked the Secretary of State for the Environment if it remains the overall policy of his Department to eliminate the private landlord.

Mr. Freeson: Private rented housing has been in decline for many years and for a variety of reasons, not least of which is the attractiveness of the other main forms of tenure. As the consultation paper on the review of the Rent Acts explains, we are concerned to safeguard the interests of existing private tenants, to arrest the physical decay of the stock, to encourage letting to meet particular social needs and to encourage new forms of social ownership and management from within the private sector.

Mr. Adley: The right hon. Gentleman has not answered my Question. Is he aware that his Government's housing policies have resulted in an increase in homelessness, masses of unoccupied accommodation throughout the country and a proliferation of squatting, to name but three side effects? Will he now realise the outcome of the Government's legislation by envy and spite? Does he


admit that it may be better to have one rogue than 100,000 homeless?

Mr. Freeson: The hon. Gentleman takes me to task for not having answered his Question. But his supplementary question does not arise either from the original Question or from the answer that I gave to it. I should make the point, which is not new, that squatting, homelessness and empty properties did not suddenly come into existence after the passage of the Rent Act 1974. [HON. MEMBERS: "It made them worse."] There is no evidence to suggest that the Act made the situation worse. Perhaps I may make the point again, not for the first time, that the biggest annual decrease in rented housing during this century occurred when there was decontrol of properties in 1957. The figures rose to over 200,000 a year compared with the current average of 100,000.

Mr. Anthony Grant: The Minister recognises the grave problem of homelessness, particularly in city areas. Can he give a single reason why a landlord who wishes to let for a limited time and a tenant who wishes to rent for a limited time should not be allowed to do so?

Mr. Freeson: There is nothing in law—I do not understand why this matter is constantly raised—to prevent a tenant who wishes to stay for a short space of time moving on elsewhere if he wishes. That happens now. But one thing is certain. I should make it clear that we do not intend to return to a situation of compulsory mobility—compelling people to leave their homes because of lack of security—such as was experienced at certain times in the past.
The next point which I should particularly make to the hon. Gentleman is that one way of assisting to resolve the problem of homelessness in London, which is mainly concentrated in the inner London area, would be for more of the outer London authorities, with which he is closely associated, to be more active and co-operative in the provision of housing.

House Building (Exeter)

Mr. Hannam: asked the Secretary of State for the Environment how many housing starts took place in (a) the public sector and (b) the private sector in Exeter in each of the years 1968 to 1976; and how many are proposed for 1977.

Mr. Armstrong: The figures for 1976 were 314 and 514 respectively. Those for earlier years appear in "Local Housing Statistics", copies of which are available in the Library. It has been agreed with Exeter City Council that it may start on 115 units during 1977.

Mr. Hannam: Does the Minister agree that the Government's housing policies are a total disaster in Devon and Cornwall, where unemployment in the construction industry has risen above 20 per cent.? Does he recall that in 1969, under the previous Labour Administration, only one major housing firm was left in existence in Exeter? Does he agree that the present policy of switching resources from what is already a stress area in the West Country to the so-called urban stress areas will mean that he finishes up with the same situation again?

Mr. Armstrong: The situation in the South-West is indeed serious. I have recently agreed to meet a deputation from the construction industry in Bristol. Exeter put in a bid for 115 houses. We have met that bid. We shall go on discussing with Exeter City Council its further needs.

Rate Support Grant (Cambridgeshire)

Mr. Robert Rhodes James: asked the Secretary of State for the Environment what has been the percentage increase in rate support grant payable to Cambridgeshire over the past three years.

Mr. Guy Barnett: Cambridgeshire's entitlement to needs element in the main Rate Support Grant Orders for 1975–76 and 1976–77 showed increases of 38 per cent. and 23 per cent. respectively over the corresponding payments for the preceding year. The initial entitlement for 1977–78 shows a reduction of 12 per cent. from the 1976–77 total.

Mr. Rhodes James: I thank the Minister for that reply. Is he aware that the drastic cut in the rate support grant for 1977–78 is a matter of deep concern to my constituents and is regarded as grossly excessive and politically motivated? Does he not recognise that Cambridgeshire is the fastest-growing county in the country and is, indeed, a special case?

Mr. Barnett: I am very much aware of what the hon. Gentleman says, because delegations from Cambridgeshire have seen both my right hon. Friend and myself. We have deliberately gone out of our way to see the counties and urban areas that have been particularly hard hit by the settlement. But the settlement as a whole is generally recognised to be a hard one in present economic circumstances. The cut-back from 65½ cent. to 61 per cent. in the Government's contribution is one example. Another aspect is that to some degree this hits certain counties like Cambridgeshire because new indicators have been brought into the assessment to try to ensure that money goes to the areas where the need is greatest. The assessment is objectively done and I can assure the hon. Gentleman that it was not politically motivated.

Mr. Freud: My constituents will be pleased to hear the Minister's last remark. Does he not accept that for local government to function properly there needs to be forward planning? The way things have gone to date, with a sudden deterioration in the local grant, means that it is absolutely impossible to provide the services for which Cambridgeshire has quite rightly been famous.

Mr. Barnett: I am well aware of Cambridgeshire's problems. I have seen delegations deliberately in order to try to see what can be done. One of the things I want to look at is the possibility of restricting loss of grant beyond a predetermined level—some kind of safety net. That is one of the ideas I am considering in view of what has been said to me about certain areas that have suffered particularly badly.

Mr. Sainsbury: How can the Minister be satisfied that the allocation of the needs element is fair when the £3·7 billion is allocated largely on the basis of the 1971 census figures and on the expenditure of the local authorities in previous years? Surely he must accept that if local authorities are to plan their expenditure they need to have a promise of continuity from one year to another about the support they will get.

Mr. Barnett: I have already dealt with the second part of the hon. Gentleman's suggestion. With regard to his first point, I would be the first to accept

that there is an element of rough justice about the present system of allocating needs element. Nevertheless it is objective, and, unfortunately, it has to be based upon indicators which the hon. Gentleman has said—and I agree—are out of date. But those are the inevitable circumstances in which we have to operate in order to try to produce a system which is objective and is seen to be so.

Mr. Rhodes James: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise the matter on the Adjournment.

Rate Support Grant (West Sussex)

Mr. Luce: asked the Secretary of State for the Environment what has been the percentage increase in rate support grant payable to West Sussex over the past three years.

Mr. Guy Barnett: West Sussex's entitlement to needs element under the main Rate Support Grant Orders for 1975–76 and 1976–77 showed increases of 43 per cent. and 21 per cent. respectively over the corresponding payments for the preceding year. The initial entitlement for 1977–78 shows a reduction of 3 per cent. from the 1976–77 total.

Mr. Luce: While it is right and proper that the county should take its fair share of the reduction in public expenditure, may I ask how it can be right to penalise the county still further by changing the distribution formula of the rate support grant in favour of metropolitan areas? Why penalise the Sussex ratepayers?

Mr. Barnett: I ought to point out to the hon. Gentleman that the redistribution is not specifically to metropolitan areas but to areas with special needs in order to spend sums of money on the services they provide. Many of them happen to be metropolitan areas, but others are not. That is the basis upon which the redistribution has gone. Only a moment ago Conservative Members were stressing the need for money to go to the inner city areas, and that point needs to be taken on board.

Mr. Hardy: Is it not the case that since April 1974 the ratepayers of the metropolitan counties have fared far worse than the ratepayers of both West


Sussex and Cambridgeshire? Will my hon. Friend be careful before introducing any safety net arrangements, because they could be extremely unfair to a large number of people who have borne the heaviest share of the burden in the last three years?

Mr. Barnett: My hon. Friend mentioned the burden borne by ratepayers in metropolitan areas. I can tell him that the average rate payable in my borough is £140. I shall certainly take the point that my hon. Friend makes.

Mr. Hordern: Is the Minister aware that the rate increase for West Sussex for the current year is only 19 per cent.? That is one of the lowest in the whole country. Will he tell the House how he justifies this system when authorities which exercise restraint with regard to their own expenditure are penalised whereas other authorities which carry out reckless expenditure are encouraged to carry out even more?

Mr. Barnett: That is totally untrue. It is not true to say that authorities which have economised are penalised. That is not the case at all. That is not the basis upon which the needs element is assessed.

Council Housing (Rebated Rents)

Mr. Budgen: asked the Secretary of State for the Environment what percentage of current council housing costs it is currently estimated will be met by rebated rents in 1976–77 and 1977–78.

Mr. Armstrong: The latest estimates of housing revenue account expenditure to be met by rents for dwellings—net of rebates—and other rents in England in 1976–77 and 1977–78 are about 43 per cent. and 42 per cent. respectively.

Mr. Budgen: Will the Minister confirm that when the country finally returns to free collective bargaining the Government will no longer force the taxpayers to give these vast subsidies to council tenants?

Mr. Armstrong: I thought that it had been agreed by both sides that housing was so important that the public have a responsibility to ensure that everyone is adequately housed. We are anxious to help particularly in the housing of those

who are vulnerable. That is the basis of our subsidy.

QUESTIONS TO MINISTERS

Mr. Michael Latham: On a point of order, Mr. Speaker. In view of the fact that last December the Government themselves slit the throat of their own Community Land Act, may I ask whether you have had a request from the Secretary of State to answer Question No. 40?

Mr. Speaker: No, I have not.

EARLY-DAY MOTIONS

Mr. George Gardiner: On a point of order, Mr. Speaker. It will have come to your notice that, due to the action of my hon. Friend the Member for Macclesfield (Mr. Winterton) in tabling a whole series of amendments to Early-Day Motions, hon. Members had the benefit this morning of having reprinted the texts of all the Early-Day Motions. This is of great service to us. Indeed, it has proved to be so popular that I am now unable to obtain from the Vote Office a copy of the paper containing all these Early-Day Motions and the amendments thereto.
May I ask, Mr. Speaker, whether it is possible for you to issue instructions that a reprint be made so that hon. Members may have the benefit of the action undertaken by my hon. Friend and, secondly, whether anything can be done to end this ridiculous practice the result of which is that we cannot read the text of our Early-Day Motions?

Mr. Speaker: I had prepared a statement in case anybody raised this matter.
have seen the amendments which were put down yesterday by the hon. Member for Macclesfield (Mr. Winterton) to numerous Early-Day Motions. Although many of them are not of very great substance, none is of such extreme irregularity as would normally cause me to direct the withholding of a notice from the Order Paper.
I have, however, a duty to point out to the House that an exercise of this sort cannot be carried out without a great deal of labour and expense. Members will have observed that it was


not possible for the whole of the blue Notice Paper to be included in the early Vote delivery today. The cost of last night's operation was £2,000. I leave it to hon. Members to decide whether these are the sort of burdens that help the House or whether they should be imposed on Her Majesty's Stationery Office, which serves us and the public well and patiently.

Mr. Gardiner: Further to that point of order, Mr. Speaker. Is not the very fact that the Vote Office has run out of these papers proof that there is a demand from Members for these Early-Day Motions to be reprinted in this form?

Mr. Speaker: The fact is that a burden was imposed on the Stationery Office last night with all these amendments that had to be published, and, being human, it also finds that it is difficult to meet all the demands that are imposed upon it.

STEEL INDUSTRY (WALES)

The Secretary of State for Industry (Mr. Eric G. Varley): With permission, Mr. Speaker, I shall make a further statement about capital investment in the steel industry in Wales.
As I informed the House on 19th July last, I asked the British Steel Corporation to carry out a further review of the options for its works at Port Talbot and Shotton in the light of the latest available information. This review has now been completed. I am grateful to the Corporation for the thorough and objective way in which it has carried out this task.
The Corporation has concluded that development of its Port Talbot works remains the most economical course of action in steel-making terms and in supplying United Kingdom users with quality strip mill products on a fully competitive basis. It recommends proceeding with the development at a deliberate pace so that Port Talbot would reach a capacity of 4 million tonnes of liquid steel by 1981–82 and 6 million tonnes by 1985–86. The full cost of this at March 1977 prices is estimated at £835 million. This programme reflects the slower growth which now looks likely in world steel markets up to the mid-1980s. It also reflects what the Corporation can realistically aim at in

terms of increased market share and in bringing new plant into full operation.
The first phase would include a 10,000 tonnes per day blast furnace similar to that now under construction at Redcar and a new steel-making vessel, in addition to the developments authorised in July. The second stage would include further investment to support iron-making, up-rating the present steel-making plant, and additional continuous casting facilities.
The Corporation believes that to close Shotton's iron- and steel-making capacity when prospects are uncertain and while Port Talbot is being built up over an extended period might risk a shortage. The Corporation is therefore withdrawing its closure proposals for Shotton's heavy end, and it visualises that iron and steel-making will continue there for many years to come. It will also undertake the necessary expenditure at Shotton to keep the open hearth steel plant in prime condition. This will lead to the maintenance of employment there at close to the present levels. This decision will not be reviewed during the period of BSC's current five-year plan; that is, not before 1982–83 at the earliest. The long-term future of steel making at Shotton can then be reviewed in the 1980s in the light of technical developments and results of our industrial strategy.
The Government welcome the Corporation's proposals as a realistic plan for the development of its strip mills' activities. The proposals also take account of regional and social needs and I have agreed to them. I look to both work force and management in the Corporation and also to those engaged on steel plant construction to make a success of the new strategy.

Sir K. Joseph: We welcome the decision in respect of Port Talbot which is in line with the arguments advanced by my hon. Friend the Member for Pembroke (Mr. Edwards) over the past couple of years.
I have three questions to put to the Secretary of State about Shotton. There will obviously be a welcome for the reprieve for a plant which has had great success and in which industrial relations have been excellent. There will be a welcome for that reprieve provided that it makes economic sense.
The questions that I want to ask are these. First, why has the Corporation changed its mind? It has withdrawn the closure proposals which it pressed upon successive Ministers. What is the reason for the change of mind'? Is it in part, perhaps, that the Corporation recognises the need for an insurance policy in the good industrial relations at Shotton against the risks of the less than perfect industrial relations in some of the new integrated steel plants?
The Secretary of State referred to the open-hearth steel plant being kept in prime condition. I understand that the steel-making capacity at Shotton may need some renewal. What is the cost of keeping the steel-making capacity at Shotton in prime condition?
Finally, when the British Steel Corporation strategy was announced it was expected to cost about £3 billion in total. What is the cost now expected to be equivalent to the £3 billion originally expected?

Mr. Varley: On the last point, the only cost that I can give the right hon. Gentleman today is the cost of the development at Port Talbot—that is, £835 million. Clearly the cost of the whole development strategy has risen. I do not have the figure with me, but I will ensure that the right hon. Gentleman and the House are informed of it.
On the first of the right hon. Gentleman's questions, I emphasise that it is the Corporation's judgment that it will require steel from Shotton for many years to come. In fact, I understand that the Corporation has issued its own statement in addition to the information that I have given to the House.
Perhaps I can reply to the right hon. Gentleman in this way. The British Steel Corporation says that it will want the Shotton steel-making capacity for many years. Of course the Corporation is worried about upturn and possible shortages, and it does not want to be in difficulties as it was a few years ago. It says in its statement, released today, that the Shotton option remains open for technological progress, commercial requirements and the potential development of hot rolled coil in the second half of the 1980s.
Industrial relations have been good at Shotton and it is for the British Steel Corporation to determine what weight to

put on that. I acknowledge that the relations are good. The question of the cost of keeping the open hearth steel making at Shotton in prime condition is for the Corporation. It has not been fully worked out but I can confirm that it is the Corporation's intention that it should be kept in prime condition.

Mr. Cledwyn Hughes: Is my right hon. Friend aware that his announcement will be received with relief and satisfaction in North Wales? Is he further aware that the preservation of the work force at Shotton at a time of recession, which is crucial in an area of high unemployment, is a tribute to the excellent productivity and industrial relations record of the steel workers at Shotton? Can he confirm that the possibility of installing modern equipment towards the end of the period to which he has referred will not be precluded? Is he aware that this result reflects great credit on my hon. Friend the Member for Flint, East (Mr. Jones), who has worked hard for this, and who cannot speak for himself?

Mr. Varley: I know that because of the ministerial responsibility of my hon. Friend the Member for Flint, East (Mr. Jones) he cannot speak on this matter. I certainly agree with the tribute that has been paid to him and I thank my right hon. Friend the Member for Anglesey (Mr. Hughes) for the comments he has made. The British Steel Corporation's own judgment is that the Shotton steelmaking option should remain open for the technological developments that are bound to take place in the 1980s. The Corporation will review the situation at that time.

Sir. A. Meyer: I fully endorse the tribute paid to the achievements of the work force at Shotton and to the heroic efforts of the hon. Member for Flint, East (Mr. Jones). Could the Secretary of State enlighten us about the necessary expenditure to keep the open hearth steel-making plant in prime condition? Does this mean renovating that plant and installing BOS equipment or does it mean attempting to maintain it in the present form as can best be done?

Mr. Varley: The operations of the present open hearth capacity at Shotton are profitable and there are profitable open hearth steel-making processes elsewhere in this country and throughout the world.


The British Steel Corporation intends to keep Shotton in prime condition because, in its judgment, it will need the steel. I have nothing to add to what I have said already about my hon. Friend the Member for Flint, East and I know he will welcome the fact that job levels will be broadly maintained in this part of Wales as a result of the announcement. As my right hon. Friend the Member for Anglesey said, this is a matter that concerns us very much. It was not the sole point on which the Corporation based its judgment, but the fact is that the situation in that part of Wales is serious and today's statement will help.

Mr. Richard Wainwright: The Secretary of State has just announced piecemeal certain major changes in the British Steel Corporation's strategy without giving any picture of the overall new strategy that must arise. Can he explain to us how it is that simply maintaining the present open hearth steel-making plant at Shotton gives that excellent work force any real chance of producing steel that is competitive in price and quality for five years ahead?

Mr. Varley: The hon. Member is being a little unfair, and I know that he always tries to be fair. The British Steel Corporation has judged that it will require the steel from Shotton for many years to come. That is its commercial judgment. It says that its plan is commercial, practical and prudent. I am often charged with interfering with the judgment of the nationalised industries. In this case, that is the Corporation's judgment. On the technological changes taking place in the steel industry—that is a matter for the Corporation and it is one that is under constant review. I am sorry that I cannot provide some of the financial information that hon. Members require and that I can only relate directly to the Port Talbot end. I shall take steps as quickly as possible, if the House thinks that this is an important ingredient, to provide the information.

Mr. William Ross: Can my right hon. Friend tell us what effect this important decision and the conditions given as justifying the change will have on the policy of capital developments of the British Steel Corporation elsewhere in

the United Kingdom? Can he give a categorical assurance that the development already projected at Hunterston, in Ayrshire, will not be detrimentally affected?

Mr. Varley: I can give that assurance. The Government are formally committed to the principles of the strategy laid before the House following the review by Lord Beswick undertaken when we were elected in 1974. It is our intention that Hunterston should be Britain's next major steel works in the period after the completion of the current development strategy. That is nothing new at all. The Corporation's plans announced today for Port Talbot and Shotton lie within the current strategy and do not stand in the way of future developments at Hunterston. That is a categorical assurance.

Sir K. Joseph: May I press the Secretary of State further about Shotton? We would be delighted to be convinced that it makes economic sense to keep this excellent labour force in action making steel. But we want to know what has changed since the Corporation pressed successive Governments to close the steelmaking capacity at Shotton. After all, world demand for steel has fallen rather than risen in that period. What has changed that the Corporation now requires the steel-making capacity at Shotton when it did not before? Also, surely the right hon. Gentleman must know the cost.

Mr. Varley: On the cost of keeping Shotton in prime condition, a note has just been spirited into my hands and it says that the cost will be £10 million to £20 million, but I do not know over what period. When the Conservative Government reviewed the development programme—and the right hon. Gentleman was a member of the Cabinet that took the decision—they said that Shotton would be closing and they gave certain projections for steel-making capacity over the years ahead. What has happened is that there has been a major world recession in steel making, affecting not only this country but other steel-making countries as well. In addition, the build-up at Port Talbot is not going ahead as quickly as was envisaged either under the Conservative Government plan or under the review that we undertook. It is the Corporation's judgment—and we


accept it—that steel making at Shotton will be required for many years, and even then technological process and development will be taken into consideration.

Mr. Ifor Davies: Is the Secretary of State aware that this anxiously and long-awaited statement will be scrutinised in great detail, not only by steel workers at Port Talbot but by tinplate workers in my constituency? The two industries are interdependent and both depend on the success of the programme announced this afternoon. I accept the statement with pleasure, but does the Secretary of State agree that constant review of investment in the steel industry will be necessary if we are to hold our own in the markets of the world, and if our steel industry is to be efficient in the face of mass world competition?

Mr. Varley: We are utterly determined to support the Corporation's investment plan. Indeed, the investment in the British steel industry is the highest in Europe and is running at record levels. While investment in some other parts of British industry has not been as much as we would like, investment in our steel industry and in the public sector generally has been maintained and increased. The development at Port Talbot will help a great deal in relation to the tinplate industry and in producing the quality of steel necessary, not only for the activities that take place in my hon. Friend's constituency but in the motor industry as well.

Mr. D. E. Thomas: The right hon. Gentleman's decision will be warmly welcomed by hon. Members representing constituencies and by local authorities in that area, and also by the local authorities on Merseyside. My only regret is that it could not have been announced earlier. A dark shadow has been hanging over the steel-making communities in Wales for a long time, partly because of the proposed decision by the Conservative Government. May I press the right hon. Gentleman on the question of the date that the Corporation gives of 1982–83 for when the decision could be further reviewed? My concern, in view of the deferments and the anxiety that there have been for such a long period over the future of Shotton, is that that should not represent a further deferment.

Mr. Varley: I thank the hon. Gentleman for his general welcome of my statement and for the constructive part of his question. I am sure that this announcement will be welcomed in Wales. He is right about that. We have to focus our attention now on the fact that the Corporation has withdrawn the closure decision. It has said that it will require the steel for many years to come and will take account of technological developments in the industry over many years. Within the current strategy and the current five-year plan of the Corporation, investment per head is higher in Wales than in any other part of the United Kingdom. That fact should be recognised by those representing steelworkers in Wales.

Mr. Roy Hughes: I congratulate my right hon. Friend and the Corporation on the wisdom of their decision. Shotton can now play a major part in Britain's economic recovery in the immediate years ahead. Is it not ironic that, four years ago, the Conservative Government in their White Paper were proposing many thousands of redundancies among these workers, and in doing so were supported by local Conservative Members of Parliament?

Mr. Varley: I wanted to strike a harmonious and happy note today, but what my hon. Friend says is true. Had the original White Paper proposals produced by the Conservative Government been carried through in their entirety, Shotton would be closing about now. But as far as we are concerned, it is the Corporation which runs the steel industry. It has concluded that it will require the steel, and I welcome the decision.

Mr. Wyn Roberts: Can the Secretary of State explain further the slow-down in development at Port Talbot, and give an assurance that the £10 million to £20 million investment in Shotton will be adequate to keep it in prime condition?

Mr. Varley: If the £10 million to £20 million is not adequate, it is for the Corporation to decide. I am not going to tell it in precise detail exactly where investment should go and at what level it should be. I am not equipped to do so, and nor is my Department. But we have regular meetings with the Corporation and will listen carefully to what it has to say on the matter. The development at Port Talbot is going ahead with


all the benefit not only to that part of Wales but in terms of quality and benefit to the steel plant manufacturers. I understand that the steel plant manufacturers will broadly welcome my announcement.

Mr. Lambie: I welcome the successful outcome of the campaign by the steel workers of Shotton to maintain steel making in North Wales. But will my right hon. Friend explain what effect the decision will have on the future of steel works, similar to Shotton, where we have major production targets and good industrial relations but where open hearth furnaces are threatened with closure, such as Glengarnock in my constituency? There is considerable feeling among some of us that important decisions affecting investment are being made in constituencies represented by members of the Cabinet and Ministers in the Department of Industry but are not being made in constituencies represented by Back-Benchers. May I have an assurance from my right hon. Friend that the future of Glengarnock will be just as assured as the future of Shotton, which is represented by Government Ministers?

Mr. Varley: I refute the charge my hon. Friend has made. I am sure that, on reflection, he will realise that his allegation is totally unjustified. He must recall that we have undertaken a very painstaking task in reviewing the White Paper proposals of the Conservative Government. We had to review them, and we came up with proposals. We took them stage by stage. In some respects, the Port Talbot-Shotton proposal was never adequate at that time. It was reviewed because of all the complexities involved, and this decision is a result of the review. I cannot give my hon. Friend any guarantees that the decisions already taken in the review can be changed at all, but I can give him an assurance that, as far as Hunterston is concerned, the next stage of the development will not be affected in any way by the decision I have announced.

Mr. Lambie: But what about Glengarnock?

Several Hon. Members: rose—

Mr. Speaker: Order. May I seek the help of right hon. and hon. Members? There is another major statement to come,

there is a point of order, there is an application under Standing Order No. 9, there is a Ballot for Notices of Motions, and there is a Ten-minute Rule Bill, all before we get to the main business of the day. I therefore would be deeply grateful if right hon. and hon. Members would make their questions as brief as possible.

Mr. Fairgrieve: In the light of his statement, will the right hon. Gentleman give us some idea of the date when development at Hunterston will go ahead?

Mr. Varley: I cannot give the date of that. I cannot add very much to what I have said in reply to the question asked by my right hon. Friend the Member for Kilmarnock (Mr. Ross). The Corporation has told the Government that it is its intention that Hunterston should be Britain's next major steel works in the period after the completion of the Corporation's current development strategy, and I do not think that I can add to that.

Mr. Heffer: Is my right hon. Friend aware that had Shotton closed it would have been a disaster, not only for North Wales but for Merseyside as well? Is he further aware that the people of Merseyside will be delighted with the decision, particularly as trade unionists on Merseyside gave their full support to the Shotton workers, along with the county council and local authorities from all parts of the area? We do not take a parochial view of these matters. Is my right hon. Friend also aware that the grudging attitude of the Oposition will be noted? It is almost as though they do not like the decision, as though they wanted to see more and more workers put out of work in that part of the country. Their attitude will not go unnoticed by the people of North Wales, Merseyside and elsewhere.

Mr. Varley: I thank my hon. Friend for his general welcome of my statement. I have made one comment about the Opposition's attitude today and I do not think I need go further on that. But I can tell my hon. Friend that I have received deputations not only from North Wales but from Merseyside about Shotton and I think we have been able to take their views into account. The Corporation also, which ultimately has the responsibility, has taken their views into account.

Mr. Stradling Thomas: While being very pleased for the Shotton workers, may I ask the Secretary of State—without any question of carping—what are the implications of this statement of strategy for the Spencer steel works at Llanwern in Monmouthshire?

Mr. Varley: There has been no change as far as Llanwern is concerned. The statement I have made relates specifically to Port Talbot and development there and the prospects for the continuance of Shotton. What I have said in no way affects Llanwern.

Mr. Anderson: Is my right hon. Friend aware that this is the most important decision affecting the economy of South-West Wales for a decade? For Port Talbot it means the difference between progressive decline and an assured future. There will be hymns of praise tonight for my right hon. Friend the Secretary of State.

Mr. Grist: Would the Secretary of State care to explain the reason for the delay in the announcement of the inevitable expansion of Port Talbot, which has cost the British Steel Corporation several hundreds of millions of pounds?

Mr. Varley: I am afraid that the hon. Gentleman, again, is giving grudging support to my statement. The hon. Gentleman really should be more welcoming. The British Steel Corporation is going ahead with development at Port Talbot, and this is important for steel making not only in Wales but for the whole of the United Kingdom. The plant makers who require this work will be delighted and will take full advantage of it. It was right that there should be a review, in the light of changes in the steel market and the world recession in steel, and it is right, now that the review is completed, that development should take place.

Mr. Wrigglesworth: Is my right hon. Friend aware that, while there will be a general welcome for his statement, there is still great anxiety in other steel-making areas such as Teesside about British Steel Corporation developments? When will my right hon. Friend be able to make an announcement about future plate mill developments on Teesside?

Mr. Varley: We have not yet received the British Steel Corporation's proposals

for Redcar, on Teesside, but we expect them shortly and I hope that we can make a decision soon after we receive them.

Mr. Hooson: Does not the fact that the British Steel Corporation now requires steel making at Shotton put the Corporation's forecasting system in grave doubt? Four years ago it regarded this as unnecesssary, although many hon. Members thought that it was necessary to continue with Shotton.

Mr. Varley: I think that the hon. and learned Gentleman is a little unfair. I have confidence in the management of the British Steel Corporation and in the way in which it is proceeding in most difficult circumstances. I do not think that four years ago the Corporation could have envisaged the effects of the world recession and all the changes that have taken place, such as the hardening in commodity prices and the five-fold increase in oil prices. These are all factors that the Corporation has had to take into account. I would not blame them too much.

Mr. Loyden: Does my right hon. Friend agree that the decision on Shot-ton was not merely a question of jobs? The statement today and the decision of the British Steel Corporation will be widely and warmly welcomed, because the decision on Shotton affected not only jobs but the whole community. Labour Members fully support the Corporation's actions in taking into account the social consequences of their decision.

Mr. Skinner: Is my right hon. Friend aware that the main reason why the right hon. Member for Leeds, North-East (Sir K. Joseph) is only grudging in the so-called support that he is giving to the statement is mainly that on this occasion he has not been able to convince the Cabinet of the need to cut back. This is a welcome diversion for the Government and one which we hope will be a precursor of many more.
Now that my right hon. Friend has been able to satisfy one devolutionary need, presumably he will satisfy others. Will he take account of the problems in our own area and seek to ensure that we restore the public expenditure cuts in order that pipeworks and other firms which use steel can build houses and do all the other necessary jobs to take people off the dole?

Mr. Varley: My hon. Friend is ingenious in getting the subject of public expenditure cuts—which are relevant in many respects—into a statement on steel. He was referring to a problem affecting his constituents and my constituents in the steel industry in North Derbyshire. The steel industry in North Derbyshire is never far from my thoughts. Again, the British Steel Corporation is helping the situation in the discussions which it has had with regional water authorities. I hope that further progress can be made in that direction.

EUROPEAN COMMUNITY (AGRICULTURE MINISTERS' MEETING)

The Minister of Agriculture, Fisheries and Food (Mr. John Silkin): With permission, Mr. Speaker, I should like to make a statement about the meeting of the EEC Council of Agriculture Ministers in Brussels on 14th and 15th March. There was further discussion of the Commission's proposals for 1977–78 farm prices but no decisions were reached, and, since we shall have an opportunity of discussing the proposals later today, I shall confine myself now to the question of fisheries. For this my right hon. Friend the Secretary of State for Scotland led for the United Kingdom, supported by my hon. Friend the Parliamentary Secretary.
At the start of proceedings on 14th March I drew the Council's attention to proposals by the Faroese authorities to introduce, for the period 15th March to 30th April, new conservation measures which would severely curtail fishing activity by Community and particularly United Kingdom fishing vessels in Faroese waters. Moreover, as President of the Council, I was scheduled to sign a framework fisheries agreement between the Community and the Faroese on 15th March—the day the new measures were due to come into force.
It was important to ensure that the sudden appearance of the new Faroese proposals did not prejudice the arrangements for signature. I am pleased to say that the Faroese have now agreed to defer the introduction of their measures and to enter immediately into consultations with the Community about them. On that basis

I felt justified in signing the agreement, which I and the Faroese Prime Minister did yesterday.
At the signing ceremony I expressed deep concern at the timing and nature of the Faroese proposals. Commissioner Gundelach supported me. It is now my hope that the consultations on the Faroese proposals can be speedily and satisfactorily completed, although I am bound to tell the House that the initial position taken by the Faroese Government does not give grounds for optimism.
I have for some time been concerned at the lack of progress towards a permanent common fisheries programme. I am therefore pleased to announce that the Council has now agreed on the urgent need to establish a permanent internal regime, and that revised proposals are expected from the Commission soon after Easter. The Council's aim will be to reach decisions on them by the end of June.
The Council also discussed a Commission proposal to establish catch quotas for the remainder of 1977 for certain species of fish in extensive areas within the waters of the member States, including United Kingdom waters. One of the objectives of this temporary measure would be to facilitate the development of the fishing industry of the Irish Republic. My right hon. Friend, while approving the principle of coastal State preference, drew attention to a number of difficulties to which this proposal gave rise.
The Commission's proposal will be studied further by officials and the Council will consider it again at its meeting at the end of next week. However, it is not now expected to be adopted in the form proposed by the Commission. In the meantime, the Irish Government undertook to defer introduction of their proposed regulation on the size of fishing vessels permitted to fish in certain coastal waters around Ireland.

Mr. Peyton: I suppose that I ought to give an interim and rather muted welcome to a statement that is at best inconclusive. Perhaps the right hon. Gentleman can help the House by explaining what was the merit in signing the framework agreement with the Faroese in conditions which, from what he has said, seem to amount almost to duress.
Secondly, it would help if the right hon. Gentleman could say what proportion of the cod catch of both this country and the Community comes from Faroese waters.
Of course I welcome the agreement that there is an urgent need to set up a permanent internal regime, but that hardly takes us very much further. Perhaps the right hon. Gentleman will say what interim arrangements will prevail until the agreement has been reached. Will he also say where he is getting in his talks with the Russians?

Mr. Silkin: It was a question of balance whether one should proceed to the signing of the framework agreement, which was what the Council had to consider. I am sure that the right hon. Gentleman will understand that. Having made the point to the Council, I was in the position of the President of the Council, and it was for the Council to tell me what it wished to be done. But the argument which then decided the matter was that the framework agreement contained the basis for reciprocity between the Faroese and the Community. Therefore, without that agreement there would have been no basis for reciprocity.
The Council also took the view that if the framework agreement were signed it would be possible to raise the questions on which I have given the House information, and we should then be able to come to a satisfactory conclusion on them. I said that in my view the initial position taken by the Faroese gave the Government no ground for optimism, and I want the House to be well aware of that. However, as long as there are consultations and as long as the Faroese have agreed to defer the introduction of their measures, there is a prospect of settlement.
I cannot give the right hon. Gentleman the exact figures about the proportion represented by the cod and haddock catches, but this issue affects us in the United Kingdom a great deal, particularly in Aberdeen and Grimsby. It also affects other Community members.
The interim arrangements are in a state of flux, and the Council has become more and more aware that, as the United Kingdom has always felt, we must now get a permanent regime. It was these pressures that showed the need for a

timetable. It is an interesting timetable, as the right hon. Gentleman will see if he cares to study it. It is a speedy timetable, as it must be since Easter is coming next month.
There has been no breakdown in the negotiations with the Russians. The talks, which are now concerned with allocation, will be resumed on 19th April. In the meantime the interim licensing arrangements will continue.

Mr. Peyton: Will the right hon. Gentleman deal with the significance and the quantity of our Faroese catch?

Mr. Silkin: I tried to deal with that matter. It is important, particularly to Aberdeen and Grimsby, and it affects both cod and haddock. I cannot, however, give an exact percentage of the total catch, particularly as there are other third countries in whose waters we fish, and that affects the situation.

Mr. Grimond: I share the Minister's anxiety over the lack of a common fisheries policy. Will he say a little more about the meaning of the principle of coastal State preference, since it is important within the policy to safeguard the rights of major fishing nations? What were the main objections that were apparently raised by the British representatives to the principle? Will these decisions on future policy be firm by the end of June, or will they be recommendations?

Mr. Silkin: The principle has been laid down, as far as we are able to put it, in the statement by my right hon. Friend, then Minister of State for Foreign Affairs, on 4th May last year. As the right hon. Gentleman is aware, the Commission produced proposals which we found totally unacceptable. The point that must be borne in mind is that revised proposals are coming forward from the Commission, and obviously we shall have to look at them.
If I may use such an expression, a deal of water has flowed under the bridge since then. We now have, for example, 200-mile limits, a new Commissioner, the situation which has developed because of third-country fishing, the Ireland situation, and so on. The importance of a new look by the Commission has therefore become all the more vital.
The provisos by my right hon. Friend were not related to coastal State preference. On the contrary, they applied to the practicalities of the Commission's proposals, some of which the Commission itself argued in the course of discussion.

Mr. Jay: May we know what has happened to the proposed settlement with Iceland, a settlement which at one time was promised for the end of January? Have our efforts here been more successful since we handed these matters over to the Commission?

Mr. Silkin: I wish that I could report satisfactory progress in this sector, but I am afraid that I cannot do so. The position there reminds me slightly of the historical position between the Earl of Chatham and Sir Richard Strachan, because at the moment both the Commission and Iceland seem to be waiting for one another. I cannot offer the House much comfort on that. I simply hope that matters will progress.

Mr. Watt: Will the right hon. Gentleman assure the House that the Commission is aware of the damage being done at present by over-fishing by EEC nations? Will he assure the House that there will be no retrospective element in the catch quotas when the Commission finally comes to a decision on the quota for 1977?

Mr. Silkin: I understand the hon. Gentleman's anxiety on both those points. We have made those points very forcefully, and we shall continue to do so.

Mr. Buchanan-Smith: Is the right hon. Gentleman aware that the Faroese proposals were greeted with utter dismay in Aberdeen? My contacts there this morning indicated great concern about the precise meaning of the signing of a structure agreement. Since the right hon. Gentleman is being realistic, will he acknowledge that if the agreement is implemented in full it will make fishing by United Kingdom vessels in Faroese waters totally uneconomic? Will the right hon. Gentleman be more specific and say what counter-proposals he might have put forward concerning fishing by Faroese vessels in Scottish waters?

Mr. Silkin: I had better explain the situation again. The position was that as President of the Council I was due to sign

a framework agreement on 15th March—the second day of the Council. In view of the proposed new measures by the Faroese, which I had seen only the weekend before, I raised with the Council the question of the agreement, telling the Council of my deep concern—I share the hon. Gentleman's concern on this matter.
As a result, the position was changed, and the Faroese were then asked to enter into consultations and to defer the measures that they had proposed to take immediately on 15th March. This deferment took place. I cannot claim that as a great and unqualified victory. I can only say that I believe that the consultations will help. At least they can do no harm. I am aware of the difficulties, and that was why I raised the matter.
Like the hon. Gentleman, I am aware of the dangers of a mounting desire to take reciprocal action once measures of this sort are taken against us.

Mr. James Johnson: Is my right hon. Friend aware of the feeling on Humberside about the agreement? It does not yet affect Hull, but the feeling in Grimsby is as doleful as the feeling that we have heard exists in Aberdeen. This is a very significant issue for us.
May I ask my right hon. Friend about Iceland? He said that he did not know much about the position there. Is he aware that the Icelandic newspapers contain no indication of even a centimetre of give in this matter? Will he comment again on this issue? If there is no give by Iceland, we on Humberside will want the. EEC to take some steps towards barring Icelandic vessels landing fish on the mainland of Europe.

Mr. Silkin: I think that I have said as much as I can about Iceland. Of course, one must bear in mind the feelings to which my hon. Friend refers. I think that I said some time ago that if one has a negotiator negotiating on one's behalf, he must be allowed to continue until the end of the negotiation before one thinks of biting. That remains my view on the Iceland situation.
I am aware of the worry in Grimsby about the Faroese suggestions. The conservation measures ought to be taken if we are to preserve the supply of fish. That is correct, and the Faroese are as


entitled as anyone else to take such measures.
If one takes conservation measures I am concerned that they shall be genuine and scientific. The four measures that I recommended to the House, some of which appear in the order, are scientifically proved and appear to be the right basis on which to proceed.

Sir John Gilmour: Can the Minister assure us that in any discussions with the Faroese special consideration will be taken of the line fishermen, who can only fish in those waters during the winter and who have no other place in which to fish?

Mr. Silkin: All such considerations must be taken into account. At the negotiations that are being conducted by the Commission we have our own officials from the Department of Agriculture and Fisheries for Scotland and from my own Department advising the Commission.

Mrs. Dunwoody: Is my right hon. Friend aware that, although we support his stand on conservation, many of us are increasingly worried about the concept of catch quotas? Does he agree that unless the quotas are policed and organised, not only the British housewife but those in the industry will be sadly put out? Will he press strongly for a workable and effective scheme instead of the vague commitments that we have at present?

Mr. Silkin: My hon. Friend has a point. Catch quotas alone do not answer the problem at all.

Mr. Hicks: When asking the Commission for revised proposals for the common fisheries policy, will the Minister assure the House that account will be taken of the dangers of over-fishing in South-West coastal waters and in particular the adverse effect that that has on the inshore fishing industry of Devon and Cornwall, particularly on those fishing for mackerel?

Mr. Silkin: We continue to make that point, because it is absolutely right. We shall see that the point is made until the matter is finally settled.

Mr. Spearing: Although the Minister has mentioned fishing, have there been any discussions about tobacco? Is it

not curious that the EEC is spending 200 million units of account next year for the purchase and storage of surplus tobacco—of which the United Kingdom share is about £15 million—when his right hon. Friend made an announcement on the subject last week?

Mr. Silkin: I felt that it was my duty to report to the House what had taken place in the Council, not what had not taken place. I have a list of some hundreds of those items that were not discussed. This is not an appropriate moment to answer my hon. Friend's question.

BUSINESS OF THE HOUSE

Mr. Pym: On a point of order, Mr. Speaker. A matter of real difficulty has arisen in connection with tomorrow's debate. At Business Questions last Thursday, the Lord President announced that tomorrow we are to discuss a White Paper on public expenditure. Yet all this week, including today, there has been no motion on the Order Paper dealing with that White Paper. The House is under the impression that we are to debate that White Paper. My right hon. and hon. Friends and other hon. Members have been waiting for that motion because it is the usual practice, for the Opposition to seek to amend such a motion and for other hon. Members to table amendments. That cannot he done if there is no motion on the Order Paper.
The Government normally table a take-note motion which is amendable. You may feel, Mr. Speaker, that it is right to accept manuscript amendments tomorrow, but this is an extremely important matter that is of public concern. I expect that there are precedents for the Government not tabling a motion by this stage, but it would be difficult to find a precedent to the particular situation, since the Leader of the House gave such long notice of the debate.
This is a matter of public concern which directly affects in various ways every family in the land. Although the matter has nothing to do with you procedurally, perhaps you could give the House guidance. There is nothing on the Order Paper, and yet in 24 hours' time the House is expected to debate the White Paper. We have not been told


that there is a change in the business for tomorrow. We are in a major difficulty and we would be grateful for your advice.

Mr. Speaker: The right hon. Member for Cambridgeshire (Mr. Pym) is correct to say that the matter is not one for me. It is not for me to decide on a motion, the form of a motion or the absence of a motion. However, I understand that the Government have now given notice that the debate is to take place upon the Adjournment.

Mr. Tebbit: Further to that point of order, Mr. Speaker. Is it possible to have a debate on the Dissolution rather than the Adjournment? That might be more final.

POLICE (PAY)

Mr. Adley: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
the threat of civil unrest resulting from the rapidly deteriorating relations between the police force and the Government".
It is a specific matter because my submission is prompted by the ballot this morning amongst the Hampshire county police constables that was declared just before midday today. In an 80 per cent. poll of mature, responsible and moderate police constables, 1,115 voted for and 578 voted against a motion sponsored by the Police Federation of South Wales which would seek to give the police, as a condition of service, the right to withdraw their labour subject to there being a ballot before such withdrawal of labour was implemented.
The stability and tranquillity of the realm is surely the first priority of any Government, and that is threatened by the mounting anger and frustration that the police force feel about the Government's handling of its pay claim.
The matter is urgent because the Hampshire ballot today is similar to that which took place in Lincolnshire the day before yesterday. Each new ballot adds to the possibility of an ugly confrontation. The Hampshire police force is among the most moderate in the land.
This is not a party issue. Parliament must give a message to the Government that they must deal with the police claim with the same spirit of co-operation as that with which they handled the seamen's claim. That is the reason that I raise the matter today.

Mr. Speaker: The hon. Member for Christchurch and Lymington (Mr. Adley) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
the threat of civil unrest resulting from the rapidly deteriorating relations between the police force and the Government".
As the House knows, under Standing Order No. 9 I am directed to take into account the several factors set out in the order but to give no reasons for my decision. The hon. Member was good enough to give me notice this morning that he would raise the matter. I have given careful consideration to his representation, but I have to rule that his submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 1st APRIL

Members successful in the Ballot were:

Mr. John Lee

Mr Patrick Mayhew

Mr. Tony Newton

SKYLINE PROTECTION

4.29 p.m.

Mr. Patrick Cormack: I beg to move.
That leave be given to bring in a Bill to make provision for the protection of skylines of historic interest or outstanding natural beauty; and for connected purposes.
I hope that this is a Bill that will commend itself to the whole House. I am sure that most hon. Members present do not need convincing of the need for a measure along these lines. What in effect the Bill seeks to do is to provide for notable views and existing and beautiful skylines in town and in country what the Civil Amenities Act did for historic and lovely areas in our towns and cities. In


effect, it extends the concept of the conservation area.
I do not think that there are many hon. Members in the House who welcome the changes that have occurred to our skyline over the last few decades. The postwar era has seen disruption and destruction of many of our finest townscapes and landscapes, especially here in London. The zeal of the developer is not a new phenomenon, but though in the past he often won his battle and many fine buildings were destroyed in the last century and the early part of this century, the scale of the replacements was rarely offensive. The urge to change and to modernise was curbed largely by the London Building Act of 1888, which was itself inspired by royal displeasure at Queen Anne's Mansions, which interfered to some degree with her late Majesty Queen Victoria's palatial privacy. The limits—80 feet or a height equal to the width of the street that the building faced—which that Act introduced were removed in 1956, and in the last 20 years we have witnessed an insensitive transformation of the London skyline.
In that time, 2,089 high buildings have been approved by the LCC and the GLC, 465 have been refused and 344 withdrawn. The figures speak for themselves.
St. Paul's—366 feet—that noble expression of national sentiment during the war, has been dwarfed time and time again. I think of the GPO tower, at 579 feet, and the Barbican development, which goes to over 400 feet, and only this week we saw on the front page of The Times the topping-out ceremony for the National Westminster Tower, of some 600 feet or more.
Many fine views, particularly of St. Paul's Cathedral, have gone for ever. That masterpiece of Christopher Wren has been hedged in—"cabin'd, cribb'd, confin'd"—and not only St. Paul's has suffered. The pastoral aspects of the royal parks, about which people were concerned when the applications to build the Hilton Hotel were first filed, have gone. And if one goes to the Department of the Environment, where those who have to exercise protection over our conservation areas reside, one sees perhaps the most insensitive monument to bureaucracy ever erected.
It is not just a London issue. Up and down the country, from Newcastle to

Birmingham, fine views have gone. In Lincoln, certain views of the cathedral have been obliterated, as they have in Gloucester and in Peterborough—where I know that my right hon. and learned Friend the Member for Huntingdonshire (Sr D. Renton) fought a valiant battle to try to protect them—and in Worcester. All over one sees that the skyline has been marred.
But all is not lost. That is why I am seeking leave to introduce the Bill.
It is not a revolutionary Bill. In fact, it draws much of its inspiration from the theory—I underline the word "theory" of the GLC's high buildings policy. It places upon planning authorities the task of designating skyline views to be protected when they devise their structure plans. It also vests certain reserve powers with the Secretary of State.
I can promise hon. Members that the Bill will be printed and will be available for inspection and scrutiny within a very few days if the House gives me leave to introduce it. I have been greatly helped in preparing this Bill by a remarkable man, Mr. Arthur Kutcher, who was for a time the Chief Planning Officer of the old city of Jerusalem and who wrote a remarkable book on planning and politics, and whose beautiful drawings and remarkable photographs I shall place in the Library after this speech if the House gives me leave. They tell far more graphically than could any speech of mine, or anyone else's, just what is at stake. Perhaps I may very briefly refer to some of the things.
There are several views of this noble Palace of Westminster and Whitehall which need protection. The view from Lambeth Bridge is sensitive to high buildings in the vicinity of Leicester Square and Covent Garden. In the City, planning permission has already been granted for a 12-storey office block at Fresh Wharf which will obscure this view of St. Paul's and St. Magnus Martyr, as well as views from Tower Bridge. Cumberland Terrace, Regent's Park, deserves to have its setting protected. The roof lines of the Temple are at the mercy of high buildings. I am sure that my right hon. and learned Friend would agree wholeheartedly about that. If one looks into Parliament Square from across the Thames and sees the silhouettes of Westminster Abbey and Methodist Central


Hall, one realises that these need protection from the burgeoning mini-Manhattan in Victoria Street.
I hope that the Bill will afford the House—there is a little time on the Government's hands and I hope that they will take over the Bill—a basis for sensible and sensitive legislation. I am not proposing what is done in Switzerland, where scaffolding has to be erected of the shape and size of the proposed building for people to inspect before they actually put up the thing. But I am suggesting that applications for development in these areas should be subject to the most detailed and critical scrutiny and examination.
Most of us who are privileged to sit here love this place and most of us would at least agree with those who are a bit cynical about politicians that, as far as the Palace of Westminster is concerned,
distance lends enchantment to the view".
I would hate to see the day when the noble vista of the Victoria Tower from the Serpentine was obliterated.
These are the sorts of thing for which we should be fighting, so that future generations and the increasing numbers of tourists who come to see what we have to offer may enjoy what fine sights remain.

Question put and agreed to.

Bill ordered to be brought in by Mr. Patrick Cormack, Mr. Peter Brooke, Mr. Geoffrey Rippon, Mr. Bruce Douglas-Mann, Mr. Stephen Ross, Sir David Renton, Mr. Mike Thomas, Mr. Donald Stewart, Mr. Reg Prentice, Mr. A. J. Beith, Mr. George Cunningham, Mr. Paul Channon.

SKYLINE PROTECTION

Mr. Patrick Cormack accordingly presented a Bill to make provision for the protection of skylines of historic interest or outstanding natural beauty; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 20th May and to be printed. [Bill 88.]

EUROPEAN COMMUNITY (AGRICULTURE PROPOSALS)

4.39 p.m.

The Minister of Agriculture, Fisheries and Food (Mr. John Silkin): I beg to move,
That this House takes note of Commission documents R/360/77, R/360/77 Addenda 1 and 2, R/2469/76 and R/2673/76; welcomes the Government's intention in respect of R/360/77 to negotiate a settlement which, taking into account the interests of consumers as well as of producers, helps to secure a better balance of the market, particularly in those sectors with a structural surplus; and, in respect of R/2469/76 and R/2673/76, endorses the Government's view that decisions on whether Commission proposals for changes in a member state's representative rate should be accepted are primarily a matter for that member state.

Mr. Deputy Speaker (Mr. Oscar Murton): Mr. Speaker has desired me to announce that he has selected the amendment in the name of the right hon. Member for Battersea, North (Mr. Jay).

Mr. Silkin: The Scrutiny Committee has rightly recommended for the consideration of the House the Community document on proposals for CAP prices and for changes in the operation of the agrimonetary arrangements. There can hardly be a subject whose effects touch so deeply the whole population of our country.
Even in normal times all the members of the Community find it difficult to complete their consideration of the price proposals before the new marketing year begins in April. This year the appointment of a new Commissioner and the fact that the European Assembly must have its chance to consider the proposals before they are decided add to the difficulties. The Commission has worked energetically to produce proposals but these were still presented about two months later than usual.
The European Assembly is meeting only on 22nd and 23rd March. I have therefore taken the unorthodox but, I am assured, not unprecedented step of summoning the Council to discuss the price package over the weekend on Friday, Saturday and Sunday 25th to 27th March. This pressure of timing is common to all nine countries. But our country has other pressures quite separate from those of our partners. For we differ

from them in a number of major respects. Above all, perhaps, we are very much a food-importing nation, and while it is right that we should expand our own home-grown production we cannot hope ever to be entirely self-supporting.
It is hardly surprising, then, that it should be our aim not only to preserve a price level more akin to our traditional requirements but to seek to put an end to the system of structural food surpluses, so long a dominant feature of the common agricultural policy and one which taunts our own people, in particular, with the twin evils of excessive prices and mountains of stored food that they cannot have. I believe it was Mr. Mansholt who said that the Common Market was not about the price of butter. No, but the two are not entirely unrelated.
This year, when all our efforts should be directed towards a determined attack upon inflation, we must now, under the rules of the Treaty of Accession, take the two final transitional steps to raise our prices to the full Community level. These two transitional steps would, in my view, give a reasonable return to producers in our own country but they will also cause an average rise of 2p in the £ in the price that the housewife pays for her food. Perhaps it is worth reminding the House what their effect will be. They will raise the price of butter by about 12p or 13p in the pound, and will also have a marked effect upon other foods, such as cheese, eggs and bread.
It is in the light of these national pressures and problems that we must look at the Commission's proposals in perspective, moderate as they may seem to some others in the Community.
The Commission's proposals fall into three distinct elements. The first is the non-price measures—for example, the revised milk action programme and the question of the rather penal levy on isoglucose. The second is the 3 per cent. average increase in common institutional prices. The third element consists of the changes in all the green currencies, except the Danish green krone.
First, we can set the stage for the milk proposals. We see a surplus of dairy products over the EEC as a whole. Butter mountains of an excess in altitude of 200,000 tonnes and other mountains of


milk powder in excess of 1 million tonnes are still growing. There are no such mountains in the United Kingdom, although there may be the odd foothill or two.
What should be our aim in discussing this milk package? We all agree that what is needed is the promotion of an efficient EEC dairy industry. If we are to have that—I have made this point on other occasions, not only in the House but to our partners—it does not mean that, because we must have a contraction to get rid of surpluses, there should be a contraction in future throughout the Community to bring about equality in misery.
On the contrary, in those areas where it is inefficient and where it is dangerous for the Community to continue to increase expansion of milk, there should be a cutback. But where milk can be produced efficiently and where technology can come in to help, this is a benefit to the producer and the consumer, which ought to be encouraged. That is why it fits in with the United Kingdom's own farming policy and with the White Paper, "Food from Our Own Resources", prepared by the Government a couple of years ago with the assistance of the industry. Perhaps it is also why, in some quarters, that White Paper is regarded as not in the best of communautaire taste and as slightly nationalistic.

Mr. Neil Marten: In which countries in the Community are there small and inefficient producers? What attitude did those countries take in the discussions that the Minister has held so far?

Mr. Silkin: The sort of countries I mean are those where, inevitably, part-time milk farming occurs on a large scale. There are parts of Germany where this is so, and perhaps parts of Belgium. It may occur a little in France but not much, and it also occurs in other parts of the Community. I fully understand the views of the Governments of those countries that one should not indulge in a ruthless attack upon the problem, that farmers and farm workers alike—although most are farms that do not employ workers because they are small family farms—should be protected and looked after as any decent, civilised,

human Government would wish to do. My point has always been that the cost should be borne by each national Government in their social policies and not by the common agricultural policy.
I now come to an allied point. We should be determined to find practical ways of abolishing the existing surpluses so that the Community consumer receives the benefit. This must mean the sort of structural changes that I have mentioned. It is most important now, in the light of discussions that we are having, that we restrain prices so that further surpluses are not created. That is an argument for an effective attack on Community intervention prices to stop this build-up.
Over recent months the House has perhaps been a little wearied with the long discussion on the various details of the milk action proposals. I am afraid that the House will have to indulge me in repeating the argument. There have been changes, and it is as well that the House is aware of them. There has been no change on the question of the tax on oil and fats—the margarine tax. The House will be delighted to hear that the Government still regard this as totally unacceptable.
The Commission has mooted the possibility of butter subsidies, but it is all rather indefinite at present. It lacks shape, and one would very much like to see whether a little more flesh can be put on the proposals. Whether one can take it up depends on the terms, particularly the FEOGA contribution. I hope that that will become clearer as we progress.
We should certainly continue to support a proposal for increased provision of subsidised school milk. Unlike the tax on margarine, this is a practical, effective and healthy way of getting rid of the surpluses. We support the measures for the quick eradication of cattle diseases, such as brucellosis.
We said from the beginning that we would oppose a ban, as was suggested by the Commission, on national investment aids to dairy farmers. We thought this wrong, for the reasons that I gave in reply to the hon. Member for Banbury (Mr. Marten) a few moments ago, because there ought to be a benefit to both the producer and the consumer through efficient methods of technology in dairy


farming. We have moved the Commission quite a long way on this. On the question of dairy farms, the proposal has been modified, and it looks as though we can accept it. On the other hand, we still believe that it is important that aid should be given in processing. I cannot see how one can say that a butter mountain is likely to grow because for example, one gives aid to the bottling of milk. That seems an absurdity, yet under the Commission's proposals, as they still stand, that is in.
We are prepared to consider, I hope as dispassionately as possible, the proposal for the conversion of dairy herds—that is, the non-marketing premium that the Commission has proposed. We should not want to go all the way with the Commission's proposals at the moment, but that may have a part to play in improving the general structure of the dairy industry. What we do not want to see, certainly in our country, is the disapperance of large and efficient dairy herds, which perhaps are rather more typical of the United Kingdom than of the rest of Europe.
Then there is the question of the co-responsibility levy. We are prepared to consider it. Rather surprisingly, the Council, overwhelmingly, was prepared to consider it. Eight out of nine members said, in some shape or form—perhaps in some cases at a lesser level—that they were prepared to do so. But I cannot see the point of a co-responsibility levy if it has to be offset by a price increase. That does not seem to make much sense.

Mr. Peter Mills: In his proposals, and with the view that he takes, is the Minister saying that British farmers should accept the full levy of co-responsibility as well as the co-responsibility that they already pay for through the Milk Marketing Board for the promotion and sale of milk, and the rest? Do we have to pay twice?

Mr. Silkin: In a sense, that is part of the difficulty that we face. I want to emphasise that if one is to have a co-responsibility levy something must come out of it. The Commission is saying that under such a levy the money will be used to increase the consumption of dairy products.

Mr. Peter Mills: We are already doing that through the Milk Marketing Board.

Mr. Silkin: One would need to look at that very closely. As I said, I do not want to weary the House with too much detail, but I thought that that was evident from what I was saying.

Mrs. Gwyneth Dunwoody: Does my right hon. Friend accept that what worries us is not just the double payment but the fact that the Commission has said plainly—it has repeated it this morning in Brussels—that it does not foresee the possibility of our continuing to keep the milk marketing boards? It has said that the boards are against the Treaty of Rome and that they must disappear. It was put as simply and as blatantly as that.

Mr. Silkin: The question of the milk marketing boards does not really relate to the co-responsibility levy. However, I agree that it is all part of the milk package. I shall come to the boards in a moment. They are vital.
The question of ice cream has exercised many adult minds, as well as children's minds, during the past few days, to judge from the Press. I think that most of us will accept that accurate labelling of products is in the consumer's interest. That must be so we want that with most products. What I and the Government cannot accept are proposals which, in the guise of promoting accurate labelling, in fact make it virtually impossible to market certain goods containing non-milk fats and proteins. That would be quite wrong, and I hope that our position on this matter is clearly and fully understood in Brussels. We have certainly made the point.
My hon. Friend the Member for Crewe (Mrs. Dunwoody), as all of us who know and respect her have known for some time, has the gift of telepathy. She mentioned the milk marketing boards, to which I intended to turn next. This matter was not mentioned in the Community proposals. I did not know about my hon. Friend's information of today, because I honestly have not seen it. My hon. Friend the Parliamentary Secretary mentioned this matter very strongly on Tuesday, I think. At that time, the Commissioner, while not commenting


very deeply on it, gave no indication that there would be any sort of firm rejection.
Indeed, if one is considering what to do about a milk surplus, I do not see how one can contemplate giving up milk marketing boards. One has only to consider what has happened in other countries in the Community where liquid milk distribution has disappeared. For example, since the Netherlands gave up the daily milk round, consumption has gone down by 40 per cent. The same experience has occurred in other parts of the Community.
The right way of cutting the consumption of dairy products in this country, which is a great liquid milk drinker, would be to do away with the doorstep delivery, and the best way of doing that is to kill the milk marketing boards. Thus, it is all logical. But there are many reasons why that daily round is important. It is important for its own sake, because it is healthy. It is important in the context of what one does about the butter mountain. Otherwise, all that it would mean is that milk consumption would go down and the mountain would grow.
But the daily delivery has a strong social basis, too. I am not ashamed to repeat what I have often said: in my constituency and in many others, the only real method of knowing whether an elderly person who is living alone needs help or is in trouble is that milk bottle remaining unopened on the doorstep. The milk roundsman or the neighbours will see it. This has an enormous social effect, which I cannot believe the Commission has studied.

Mr. Thomas Torney: Far from abolishing or trying to abolish the milk marketing boards, would my right hon. Friend try to convince the French and others that if they had a similar system they might not have such a large milk surplus? Will he try to get that across to them forcefully, while defending our right to continue with our marketing boards?

Mr. Silkin: There are many things in this country—that is one of them—which the rest of the Community would do well to follow.
I come now to the proposals about isoglucose.

Mr. Nigel Spearing: May I ask a question before my right hon. Friend leaves the dairy sector? He said earlier that he thought that the butter price would rise by 12 per cent.—[HON. MEMBERS: "He said 12p on a pound."] Yes—12p on a pound, not 12 per cent. Before the end of the debate, will my right hon. Friend check that? According to the House of Lords Select Committee which considered this matter—I refer to page 17 of its Report—the possible impact on retail prices was a total increase, including the transitional steps and the price package, of up to 17½p per pound weight. Can he confirm that?

Mr. Silkin: I was dealing only with the two transitional steps. They will produce a rise of between 12p and 13p. It is difficult to be exact, and that 1p may make a great deal of difference. However, it is difficult to know whether the Commission's proposals will produce an increase of 5½p or 6½p. My reference was only to the transitional steps.
Isoglucose is a new product. Because sugar is produced as it is in the Community, the Commission views with great caution—more, with dismay—any other product that might compete with that process. Therefore, the Commission says, the best way of dealing with the matter is by means of a penal levy. It is a little like the margarine tax applied to another product, perhaps for much the same reason.
There is a lot to be said for taking sugar and isoglucose together—and any other product that the future might bring; this is one that many of us had never heard of a few months ago—on an equal footing, so that neither has an advantage over the other. That makes sense. It does not make sense to me to penalise out of existence something that may be of great benefit to the consumer. In the end the consumer will make the choice—and let us make no mistake about that. It does not help to take a Luddite attitude to these things. We have made it absolutely clear that any such basis is wrong.

Mr. Paul Hawkins: Perhaps the Minister could come to the Eastern Region shortly to see the immense benefit that the sugar industry has produced for farming and employment there. It has helped lorry drivers,


men working on the land and men working in factories. The industry has been responsible for one of the best changes in the system of farming, and has achieved what could not be done through other crops. I hope that the Minister will bear that point in mind. It is a most important industry on the arable lands of the Eastern Region and its importance goes beyond the growing of sugar. The industry has widely benefited employment.

Mr. Silkin: When I visited the Eastern Region a few months ago, things unfortunately looked rather sorry, because of the bad weather conditions at the time.
I said "on an equal footing" and I do not think that anybody should object to that. In other words, it should be worked out one against the other. That is the right approach.

Mr. Douglas Jay: The Minister has said that these proposals do not make sense. Can he assure us that in their present form they are unacceptable to the Government?

Mr. Silkin: That is what I was trying to say. I hope that I was reasonably unambiguous about it.
The second part of the Commission's proposal refers to prices. I have emphasised repeatedly, and I re-emphasise today, the need for restraint. Indeed, I should like to put this point to the House as I have tried to put it to farmers. Farmers must understand that it is not entirely in their interests to have high prices if they attack the housewives in such a manner that they are unable to afford them. It is no good in the long term—and even now—producing goods for store. They should be produced for human consumption.
If I am asked to justify this I do not have to go much further than the food expenditure survey that was published about 10 days ago. It gives some interesting facts about what happened during the last quarter of 1976. I shall not weary hon. Members with the details, because they can examine them themselves, but as the prices of beef, lamb, potatoes, milk, eggs and sugar have gone up, consumption has gone down by an almost related percentage. In that quarter, the consumption of only one commodity did not go down, and that

was pork. It is equally interesting to note that that was the only commodity whose price went down.
I now come to the third of the three stages of the proposals—the green currencies. In a way they are the central part of the package. The currencies determine what common price levels really mean when they are converted from units of a pound into national currencies. The Commission's proposed change in the green pound is 5·94 per cent. In fact, that adds 6·32 per cent. to the sterling value of CAP support prices, or aboue 1¼per cent. to retail food prices. The 3 per cent. increase proposed in common prices would add ¾per cent., making a 2 per cent. increase in all. That is about the equivalent of the two transitional steps.
I first explained my views on the green pound during the debate on 22nd October last year. When I look back to the answers that I have given at Question Times and the speeches that I have made, I find—a little to my own alarm, since, as Sir Winston Churchill said, consistency is the prerogative of hobgoblins and small minds—that I have been consistent on this. Nevertheless, small-minded or not, it is a fact that, as I have said all along, the green pound simply cannot be abolished unless we are to have something of greater value than any devaluation that we make, for the benefit of our country in the national interest; and that means, in fact, for the benefit of our consumers. Certainly if we found something like that I should not object to a modest devaluation of the green pound. But I would object in any circumstances to the total elimination of the gap between the two pounds, because that would be ruinous for the country and for agriculture generally.
One hears speeches claiming that farmers are being taxed at 35 per cent. and that that ought to be immediately remedied. I know that Opposition Members will raise their voices with me in saying that it is nonsense. I do not hear those voices now, but no doubt they will come.

Mrs. Dunwoody: The Minister is an eternal optimist.

Mr. Silkin: I am, as my hon. Friend says, an eternal optimist.
These proposals for changes in the green currency arrangements are not included in the price proposals but they lie upon the table. While talks take place on devaluation and revaluation of the green currencies, we remain committed to our view—which I think is the right view—that it is the national concern of each member State to decide, in the light of its economy, when, it at all, it proposes to change the value of its green currency.
I shall not weary the House by pointing cut something that has been said on a number of occasions by my hon. Friends the Members for Southampton, Test (Mr. Gould) and Newham, South (Mr. Spearing), namely, that there is an alternative method and it is a respectable one, since the Community has used it for calculating the green currency basis. It would show a different result about which State was more in deficit in terms of green currencies.
I hope that the House will understand that the British Government do not have a dogmatic view on this point. There is no dogma involved. The national good alone should decide the matter.
I make the final point that it has been said to me that to treat the green pound in this way is to attack the farmer on behalf of the consumer. I do not dispute that the stand that we have taken over the green pound has been of enormous benefit to the consumer. However, it has not entirely been to the detriment of the farmer. Not every section of farming is affected by the green pound. Horticulture is hardly affected, and neither is sheep meat. But there are areas where it could have a positively dangerous effect.
I saw today a briefing from the National Farmers Union which says that last year, largely, but not entirely, because of the drought, there were additional costs of £460 million for cereals. What do farmers think the cost of those cereals—most of which were imported from Community countries—would have been if we had devalued the green pound? Of course, it would have been a great deal more.
Even on that basis, there are a number of arguments that need to be tackled in a national framework and considered in that light.
I hope that I have given the House some indication of the difficulties that we shall be facing in the price negotiations and also of the principles that are involved for us. We have to balance the legitimate needs of the producer with the necessity to provide food for the housewife at prices that she can afford. I hope that this balance, so long a part of our way of life, is beginning to be understood in Europe. There was rather more than symbolism in the fact that for the first time in history this week a President of the Agricultural Council of Ministers received a deputation not only from COPA—the European Association of Producers—but from the European Consumers' Association.
Our aims must be, first, to see that our producers receive a living—and a good living—and, secondly, to safeguard the interests of the consumer by the maximum restraint upon prices. I doing so, we must press for a basic improvement in the workings of the common agricultural policy, particularly in relation to the structural surpluses.
The amendment in the name of my right hon. Friend the Member for Battersea, North (Mr. Jay) and other hon. Friends asks us to press for easier access into the United Kingdom for efficiently-produced foodstuffs from outside the EEC. We have begun this process by securing a new régime for the importation of meat that will be available in April, and only yesterday my hon. Friend the Parliamentary Secretary was pressing for a continuation of further importation of potatoes with a view to reducing the price for the housewife. I have already dealt with the other points made in my right hon. Friend's amendment, and therefore have no hesitation in telling the House that the Government are prepared to accept it.
I do not underestimate the task that lies ahead, and, for the reasons that I have given, it would be foolish to presume that our objective will immediately be achieved, but I believe that the Government are on the right lines in their approach and that in this approach we have the overwhelming support of the people of Britain.

5.13 p.m.

Mr. John Peyton: The right hon. Gentleman deserves commendation for one thing in particular. His ability


to believe the totally incredible is wonderful. He believes that the Government are on the right lines. There are few who would go along with him.
I call the right hon. Gentleman's attention to the quaint arrangements—I use the politest term that I can—that we have for papers here. The right hon. Gentleman gave some valuable evidence to a Select Committee last week and there are still no copies of the transcript in the Vote Office, though one is available for inspection in the Library. This seems a rather foolish arrangement, so perhaps the right hon. Gentleman will draw it to the attention of the Leader of the House, who, since he ascended the mount, is no longer as sensitive as he used to be to the needs of Parliament.
I was interested to hear the Minister say that the Council was to have a long weekend. This is probably a good way of settling things. I hope that at least some meetings will be conducted with fewer people. I am not referring to Ministers, but to the great forces who assemble at Council of Ministers' meetings. It would be useful to have more informal exchanges in which members of the Council will not feel encouraged to go along with formally prepared positions which they read out while no one else listens.
The hon. Member for Crewe (Mrs. Dunwoody) mentioned a point that I should like to draw to the right hon. Gentleman's attention. Evidently the hon. Lady has information which is not available to us about the Commission's intentions in regard to the Milk Marketing Board. The Commission would be well advised to address itself to the problem of eliminating unwanted surpluses before it takes damaging action to interfere with the means which have been evolved and tried over many years for marketing this product. There is a fair degree of solidarity on this issue. I hope that the hon. Member for Bradford, South (Mr. Torney) will be able to catch Mr. Speaker's eye in the debate, although if he continues to make his speech from a sedentary position I shall not make all that much effort to be here when he finally speaks.
There is no division between us on the question of the marketing boards. We are conscious of the useful and constructive

rôle which they have played for many years.

Mr. Norman Buchan: Can the right hon. Gentleman tell us what sort of guarantees he and his right hon. Friends had in this connection when they took us into the Market? I spent many weeks labouring precisely this point and received a number of mystical and miasmic assurances that were undoubtedly meant to encourage me in the belief that the Government of the time had this well tied up.

Mr. Peyton: I shall leave the hon. Gentleman surrounded by mystical miasma for the time being. His Government had every opportunity to renegotiate the treaties. We were told that they set out to do that.
I am trying to be helpful and I am sorry that it provokes so many interruptions. I agree with the Government that the Milk Marketing Board makes a valuable contribution to the marketing of milk and I take the Minister's point about liquid milk. We should be at one with the Government in opposing any move to strip the boards of their essential powers.
Unlike the Minister, I assume that the Commission regards the proposals as something of a package deal and I shall approach them in that light. It is clear that they will please no one, but it is unlikely that any alternative that we could think of in present circumstances would do so either.
It is fair that we should attempt to judge the proposals against the rather sombre background of our affairs today, which those who condemn the proposals will, I am sure, be only too ready to ignore. We must not forget that our currency has declined in value by up to 30 per cent. against other important world currencies. Our inflation continues to run at unacceptably high levels. Consumer prices in the last three months have risen at an annual rate of 23 ½ per cent., whereas those in other countries inside and outside the Community who compete with us have suffered rises of only a third or a quarter of that figure, and sometimes even less.
The green currencies were introduced as a device to assist farmers and traders. They were never designed to come under


the kind of strain to which they have been subjected as a result of the large discrepancies in values—amounting to 30 and 40 per cent.—which have arisen between the green currencies and the real ones. Apart from the fact that there has been a considerable burden on the Community in paying subsidies to the consumer in this country, there is also a point which the Minister failed to make this afternoon. This has all happened at the cost of considerable anguish to our producers. I accept from the Minister that the devaluation of the pound is a two-sided coin, even in the context of farming, but it would have been proper if the right hon. Gentleman had said something about the anguish through which the pig industry has passed—a dismaying experience.
If the right hon. Gentleman says that the green pound is a valuable bargaining counter, he will provoke the question why he has not used it effectively to re-open the basis on which the mcas are calculated so that the anomalous arrangements covering pig meat can be revised. There is no doubt that the present arrangement has put our own efficient producers in a position in which they can compete with nobody—and certainly not with the Danes or the Germans who have been making the most of a favourable situation for them. The pig producers in this country are experiencing a loss, of £2·50 or £3, even after subsidy has been paid. There is a limit to the length of time anybody can go on with that unpleasant experience.

Mr. John Lee: Since the right hon. Gentleman castigates the present situation, will he make his position clear? Does he or does he not favour the devaluation of the green pound? In view of his lamentations about our rate of inflation, will he make clear the Opposition's view?

Mr. Peyton: The hon. Gentleman has never been much of a listener, although I am always obliged to him for his interventions. I am never sorry that I have given way to him because he always bowls an easy, slow ball which one can see coming a long way off. [HON. MEMBERS: "Answer."] I intend to make my own speech without the advice of Labour Members. I shall come to that matter in a moment. I am now applying myself

to the question of food prices which, as the Minister has made clear in many speeches throughout the country, will rise.
The right hon. Gentleman the Prime Minister appeared to be in some doubt about the matter yesterday when he used some rather vague words. He said:
food prices and the prices of commodities have risen very much. We are now beginning to see the end of that. As I said to the House previously, this will, I think, work its way through by mid-year, according to our forecasts."—[Official Report, 15th March 1977; Vol. 928, c. 216.]
I wonder whether the Prime Minister's forecasts are the same as those put forward by the Minister of Agriculture. This is a moment when the Government are choosing to phase out the food subsidies which they so unwisely introduced.
In our view, the Government's handling of agricultural pricing matters and of the prices charged by food processors and manufacturers show them to be very much more sensitive to public opinion than they are when dealing with such matters as increases in gas prices.
I wish to refer to the document "Food from Our Own Resources", produced by the Government not all that long ago with the endorsement of the industry—a document that we welcomed. We are now in a position in which we have fallen 30 per cent. behind the projections then made for agricultural production. We have been told that the Government still adhere to their policy. Some farmers will still remember the words that appeared in that document.
If farmers are to invest in expansion they need a degree of assurance about their future returns.
Those words were widely read and welcomed by the agricultural industry and they have been remembered, but farmers now find it difficult to understand why their costs have risen by nearly 20 per cent.—a total of over £900 million—and why they must be content with the recovery, according to the Commission's proposals, of 14½ per cent.
The Minister made an extraordinary speech, because he did not make clear his own reaction to this point. He did not deal with the question of the rise in the costs of production, nor did he say whether he regarded as adequate the increases due to come to British farmers as a result of the transitional payments


and the benefits that will follow from the devaluation of the green pound. I hope that the Minister in replying to the debate will make that point absolutely clear.

Mr. John Watkinson: Will the right hon. Gentleman face up to the problem because it is the core of what he is saying? If he is asking for end prices to be increased, does he not realise that there is considerable consumer resistance to those end prices and that eventually farmers may not be better off? In those circumstances, does he not regret the fact that the Conservatives abandoned the deficiency payment system?

Mr. Peyton: But we are not now dealing with market prices. We are dealing with intervention and support prices, which is a rather different matter. [HON. MEMBERS: "Answer."] We are now discussing the Commission's proposals and, on behalf of the Opposition, I am entitled to ask what the Minister intends to do. We have not heard his views on the matter, and Labour Members should not be surprised that we ask these questions. Interventions of the kind made by the hon. Member for Gloucestershire, West (Mr. Watkinson) are a remarkable testimony to the good manners, patience and infinite courtesy of the Opposition. If the positions of the two sides in the House were reversed, as will undoubtedly happen soon, these questions would be asked with considerably more roughness than I am capable of, and would be repeated frequently, giving voice to the reaction of farmers to these matters. The view would be "Why should members of the Government continually spell out prospects which they themselves never observe?"
What would be the wise attitude of the agricultural industry to these proposals? First and foremost, it must bear in mind that its customers—I am now following the right hon. Gentleman—are a great deal less well off than they were. It must realise that the real value of the net Wage of the industrial worker after tax and social security contributions has sunk considerably under this Government. Many people have suffered a decline in living standards. I am sure that the right hon. Gentleman is right in reminding the farming community that its customers have been pretty hard hit.

The right hon. Gentleman could also point with advantage to some of the miseries being endured by small business men.
In this package there are some important gains that are not available, for instance, to the European milk producer. It is proposed that that producer will get 3 per cent. in the autumn less a 2½ per cent. co-responsibility levy. I agree with the right hon. Gentleman that there does not seem to be much point in paying 3 per cent. and then taking back 2½ per cent. Either the Commission will have to explain the merits of this sophisticated exchange or it will have to eliminate it altogether.
Over the year our own milk producers will be receiving increases of 14 per cent. less the co-responsibility levy. I see no point in exempting the hill farmer from payment of the levy. If the Commission's policy is directed against the production of milk by the hill farmer, why let him off something that would discourage him from acting contrary to the Commission's policy?
I take the right hon. Gentleman's point that an efficient dairy industry does not require all-round misery. We do not want to see an across-the-board cut in the milk cow population. We want to see the elimination of uneconomic producers wherever they may be found.
The other European producers will not like this package. They will receive no transitional payments. Most of them will not benefit from a green currency devaluation. However, we shall find the package to be of some assistance in the elimination of high cost producers, which will diminish the likelihood of unwelcome surpluses.
It is easy to use emotive language about surpluses. We are becoming familiar with terms such as mountains and rivers. If the mountain of butter, about which we have heard so much, is broken down, if that is what one does to butter mountains, it ends up as a surplus of 750 grammes, less than 21b. per head of the population of the European Community. It should be seen in that proportion as opposed to something that is getting totally out of control. However, it is a totally unacceptable way out of a difficult situation to hand surplus butter to the Russians at bargain-basement prices.

Mr. Mark Hughes: rose—

Mr. Peyton: No, I shall not give way. I have given way on quite enough occasions.
The right hon. Gentleman appeared to be a little more open-minded today about the devaluation of the green pound than on other occasions. I was rather sorry that he did not mention the damage that has occurred to the pig sector as a result of the failure to accept a marginal devaluation at an earlier date.
At some time I hope that the right hon. Gentleman will tell me the net effect of the proposals, as he sees it, on pig meat and the pig producer. If the proposals of the Commission are accepted as they stand, will they, in the right hon. Gentleman's opinion, make possible a change in the basis of the calculation of the mcas for pigmeat? This is an important matter that I imagine the right hon. Gentleman must have in mind. If he cares to interrupt me, I shall be glad to give way.

Mr. John Silkin: This may take a little time. I did not interrupt the right hon. Gentleman because I thought that he was nicely launched on his flow. It would have been cruel to have interrupted. From time to time I have tried to explain, when talking about pigmeat, that the equation of a green pound devaluation with the consequent drop in mcas is almost exactly met up to about 10 per cent.—beyond that level no one would go anyway—in the increase in feeding stuffs. I thought I had bored the House so often by putting that point that it was unnecessary to put it again. I agree about the need to recalculate mcas. It was for that reason that I took the national measures that appear to have irritated one or two people outside this country.

Mr. Torney: My right hon. Friend is being taken to court.

Mr. Silkin: Yes, I believe I am being taken to court on this issue. However, I understand that the Commission will be coming forward in due course with its own proposals for a recalculation of mcas. Perhaps we can all agree that that would be the most beneficial thing to do. I have said that I do not regard it as being something that is due to us in any way other than in fairness and in equity. I am delighted to say that one or two other

countries are beginning to think the same—for example, France and Ireland.

Mr. Peyton: I shall read with interest in Hansard what the right hon. Gentleman has just said to see whether he has added anything to what we already knew.
It is a matter for slight concern that the right hon. Gentleman, having, as he may see it, been forced to break the rules of the Community that he has just joined, should take the breach of those rules so lightly and flippantly.
I appreciate the point that has been made by one or two of my hon. Friends about isoglucose. However, I think that I share the right hon. Gentleman's reaction. To say that because a new product appears to offer a price advantage to the customer it ought immediately to be stamped on is a reaction of questionable wisdom. I am not far away from agreeing with the right hon. Gentleman on that.
It is important to remember what Mr. Gundelach said about the total effect of these proposals—namely, that the retail price index in this country would be affected to the extent of an increase of 0·7 per cent. The Minister may put it a bit higher, but not all that much It is to be remembered that we are dealing here with intervention and support guide prices, not market prices.
I want to conclude by saying a word or so about—[HON. MEMBERS: "Hear, hear."] That kind of reaction from that kind of quarter is one of the greatest compliments that any man could ever receive. I wish to conclude by saying a word or so about the common agricultural policy.
I believe that there is a danger of a permanent division arising beween those who champion and applaud that policy and those who detest and oppose it. One reason for it is that those who framed it could not think of a better alternative.
I am concerned that we should approach this serious problem in a responsible fashion and attempt to mould the common agricultural policy to the reality of requirements throughout the Community. In particular, we should attempt to introduce flexibility in its arrangements wherever possible. There can be little doubt that, in the light of experience so far, the more detailed and fussy the rules with which the CAP surrounds itself, the


more difficult and tiresome will become the lives of those who wish to observe and to make it work and the easier it will be for those who find it convenient as a matter of habit to bend the rules to their own advantage.

6.43 p.m.

Mr. Douglas Jay: I beg to move, at the end of the Question to add:
'further urges the Government to press for easier access into the United Kingdom for efficiently produced foodstuffs from outside the EEC; and opposes the EEC Commission's proposals for exclusive use of butterfat and milk proteins, for a prohibitive levy on the production of isoglucose, and for a tax on vegetable and marine fats and oils'.
I move the amendment if only because it makes it easier for my right hon. Friend to accept it, as he has already done. I am grateful to him for accepting the amendment. That at least carries us a little further.
I applaud my right hon. Friend's speech and his general attitude to the common agricultural policy. I only wish that we had heard that kind of speech from either Front Bench at any time in the last 10 years.
I am afraid that I cannot pay the same compliment to the right hon. Member for Yeovil (Mr. Peyton). After listening carefully to his speech—I was not one of the interrupters—I am still no nearer to knowing whether he is in favour of or against the CAP.
I think that more and more people in this country are beginning to realise the extent of the economic damage which has been done to us by the common agricultural policy. Indeed, its damage is now so great that mere tinkering with it and mere talk of reform is no longer enough. The only way out which will prevent irreparable damage to this country is to declare clearly that, unless we have drastic reforms by a certain date not too far ahead, we shall have to break free altogether from the CAP.
We are now told that the Milk Marketing Board is contrary to the Treaty of Rome. I hope that my right hon. Friend will make clear in Brussels that, if that is so, it is the Treaty which will have to be amended.
I put this immediate point to my right hon. Friend, which I have already raised with him. There is an opportunity, under

Articles 52(3) and 135 of the Treaty of Accession, for us to avoid the further completely unnecessary transitional increases in food prices this year. I know that my right hon. Friend has looked at that question. However, I should like to press him again, in the light of the present level of food prices, to see whether we can here get some relief in accordance with the Treaty.

Mr. John Silkin: That was one of the first things at which I looked. I found very little comfort from the legal viewpoint. In the light of my right hon. Friend's correspondence, I have looked at the matter again. I do not see any way round it. This may sound a bit of an inconsistency, but there does not seem to be any legal loophole. Even if there were, we could not institute it. That would have to be done by the Commission. Either way, I do not see what can be done. I have looked at the matter thoroughly.

Mr. Jay: If my right hon. Friend is right, it appears that one further condition that we were told was going to relieve us of some of the disadvantages of the common agricultural policy and the Treaty of Accession has little substance. I still hope that my right hon. Friend may be wrong.
In any case, it is not enough merely to stop all further increases in the already excessively high CAP prices. Instead of raising them still further by 5 per cent., as the Commission proposes for this country, including the transitional increases, prices should now come down wherever they are well above world prices and where large surpluses consequently exist. EEC prices for virtually every standard foodstuff which is vital to this country are now far above world prices. Indeed, all the propaganda that we had about there being no surplus food in the outside world, and the era of cheap food coming to an end for ever, has been proved to be yet another deception of the public.
According to the Commission's figures on page 98 of its Agricultural Report for the year 1975–76, wheat in the EEC last year cost 25 per cent. to 45 per cent. more than the world price. Maize, which the right hon. Member for Yeovil should know is a major feeding stuff and cost for our farmers, cost 28 per cent.


more than the world price. Beef and veal cost 58 per cent. more, milk powder cost 166 per cent. more, and butter cost 220 per cent. more—three times as much as the world price. At present, because of the excellent grain harvests last summer in North America, Russia and India, the gap has become even wider than in 1976.
Take the example of butter to illustrate the price gap. The Commission, with the valuable help of a French Communist millionaire, as we now know, has recently sold thousands of tons of butter not merely to the Soviet Union but to Yugoslavia at about 17p per lb. New Zealand, if she were allowed, could supply us with butter at about 36p per lb. The British consumer is already forced by the levies imposed to pay 50p or more per lb. The EEC price, which we shall be forced to pay if we submit to all the horrors of the CAP within a year or so, is nearer to 70p per lb.

Mr. Bryan Gould: It is over 70p.

Mr. Jay: I always understate my case, as my hon. Friend knows. It is probably over 70p. That is about five times the price at which butter is now being sold to the Soviet Union and, indeed, to any country outside the EEC that is willing to buy.
I turn to cheese. On New Zealand and Australian cheese, the British consumer, in so far as we are able to import it at all, is now paying a tax of 60 or 70 per cent. We are paying a tax of over 50 per cent. on Canadian wheat. I am advised that is as high as it ever rose under the old Corn Laws before 1846. The tax on maize, which is a major raw material both for British industry and to British agriculture, is virtually as high. The House may be interested to know the latest figures because it is one of the things that explains the increased cost of agriculture to which the right hon. Member for Yeovil referred but did not explain.
Maize can now be landed untaxed in this country for £74 a ton. The levy at present being paid is already £30 a ton and has to go up this year to £49, making a 70 per cent. tax. These taxes on butter, cheese, wheat and maize are at a much higher rate, for

instance, than VAT on the general range of many inessential goods.
I now turn to beef. Even after the liberalisation which my right hon. Friend has obtained, and on which I congratulate him, we are now forced to impose a 20 per cent. import duty and a levy on top of that although Australia and Argentina and some other countries can supply us with substantial quantities at low prices. We are raising the price of beef to the consumer by at least 50 per cent.—again I understate my case—more than what we would have to pay if we were not in the EEC.

Mr. Douglas Hurd: I would not quarrel with the right hon. Gentleman's actual figures. But does he not accept that the figures two years ago were different and that the figures in two years' time could again be different? Because we cannot change our agricultural farm policy every two or three years, may I ask the right hon. Gentleman whether, over a period of 15 or 20 years—because of the growth in the world's population and the increasing pressures from the developing world—he really believes those kinds of supplies will prove to be the best friend of the British housewife?

Mr. Jay: If the hon. Gentleman is right in thinking that world prices will be higher, then there is no need for the CAP. All the evidence over the past 20 to 30 years shows that the production of food in the world, particularly feed grains, has on average increased faster than the increase in world population. There is no reason why that should not continue.
I was coming to lamb. In order that the House may judge what would be in store if we adopted what I hope my right hon. Friend will resist—what those in Brussels call a "common sheep meat policy"—the situation now is that New Zealand, if free to do so, could land lamb in this country at a price of about £368 or £370 a ton. The internal EEC price at present is £1,997 a ton—five times as much. I am not saying that New Zealand could land all the lamb that we would wish at that very low price; but, nevertheless, the gap is an incredible one.
The EEC price for sugar also is now far above the world price, as is admitted in the documents that we are discussing,


and a sugar mountain is now beginning to build up. The world price for skimmed milk powder is less than half the EEC price. Of course, with these wildly excessive prices we get surpluses. The right hon. Member for Yeovil tried to minimise them by dividing by 250 million. We could break down almost any figure that way. If I applied that to the right hon. Gentleman's income I am sure that he would find that it had a considerable effect.
The actual fact, in plain English, is that we now have 250,000 tons of beef, 250,000 tons of butter and 1,100 million tons of skimmed milk powder in stock. Those surpluses are not there because people are producing too much. They are there because prohibitive prices have prevented the consumer from getting them. We do not want to reduce production. We want to have the production and at a price at which the consumer is able to buy.
Is it not alarming that in the United Kingdom in the past year—my right hon. Friend gave some figures today—the consumption of beef, lamb, butter and milk has actually fallen? Some figures of consumption have fallen to the level of rationing that we were told 30 years ago was such a miserably low standard. That means that the real standard of living for a large section of our population is being unnecessarily lowered because of our membership of the EEC.
If more proof were needed, it is worth looking at what has been happening in the past year in some countries outside the EEC. I wonder whether people realise that in Canada, and in some other countries, wholesale and retail food prices actually fell in 1976. In the United States they rose by only 1·5 per cent., whereas in the EEC as a whole they rose by 14·6 per cent. and in the United Kingdom by 20 per cent.
Nor are we saving public money by having abandoned the deficiency payments and introduced this crazy protectionist policy. In the present year the manoeuvres of the Commission authorities on dairy products alone—my hon. Friend the Parliamentary Secretary used the figures in Brussels yesterday—show that about £1,100 million is being spent out of the EEC budget to which we contribute. Two months ago I was given a figure of £925 million. It has now

risen to £1,100 million on dairy products alone.
With the help of the Commission's own price figures of world prices and the EEC prices that I have quoted, one can estimate the cost of the CAP to the balance of payments last year. If we take the actual volume of imports of foodstuffs into the United Kingdom, and the prices that I have quoted, the extra cost of importing our food at EEC prices, rather than at world prices, amounted in 1976 to about £900 million to our balance of payments. By means of the curious green pound and mca temporary devices, we got back about £400 million. If the Minister has a better figure perhaps he can give it to me later. Therefore, as a result of the CAP, there was a net burden of about £500 million. Of course, all the propaganda tells us that we are getting £400 million but we are not told about the £900 million we lose.

Mr. Spearing: With regard to the £400 million, may I ask my right hon. Friend whether it is not a fact that some of this money goes to the exporters on the Continent, particularly to German and French farmers? Although it may help our prices, it also helps theirs and without it they would have still greater surpluses.

Mr. Jay: That is perfectly true. Accurately, one should not say that we get this. But it is a gain to our balance of payments. And the £500 million net loss to our balance of payments is additional to the £1,100 million deficit on trade with the rest of the EEC on goods other than food which we suffered last year. In addition, I see from the public expenditure White Paper that our net payment to the EEC budget in the current financial year is £447 million. That adds up to a total balance of payments burden arising from EEC membership of about £2,000 million at present.
A very heavy responsibility rests on the shoulders of the right hon. Member for Sidcup (Mr. Heath) who saddled us with the Treaty of Accession which has had these results, and a substantial responsibility also rests on everybody who voted for the European Communities Act.
Coming to the immediate present, in my right hon. Friend's negotiations in Brussels there are three new and rather extraordinary proposals coming forward


of which he spoke. I think that it would be as well to be perfectly clear today where we stand in relation to these three extra proposals.
First, because sugar prices are much too high, the Commission threatens to impose a prohibitive tax on this low-cost substitute which we have all learned about in the last few weeks and which is called isoglucose, a product of maize and a very satisfactory substitute, I understand, for sugar. If this were done, British factories recently built would be thrown out of business.
Even the Economist condemned this extraordinary proposal. But it is worth noting that this is a proposal seriously made by the Commission, ridiculous though we may think it to be. Even the Economist condemned it and said that it would be more sensible to reduce the price of sugar. I understand that my right hon. Friend said that the proposal is regarded as unacceptable by the Government of the United Kingdom. I take that to mean that he will not in any circumstances approve of it. It is to my mind an absolutely indefensible proposal of which I hope that we have heard the last.
Secondly, the Commission, because of the muddle it has got into over skimmed milk, now proposes—here I was not quite so sure what my right hon. Friend said—in effect to ban the marketing in the United Kingdom of a range of milk products including skimmed milk powder with added vegetable fat. This proposal would both deprive the consumer of a valuable product and put out of business a whole factory—in this case in Northern Ireland, of all places.
I understand that the Commission calls this particular bright idea the
exclusive use of butter fat and milk proteins".
This seems to be just another vicious restrictionist device designed to prevent the consumer from being allowed to purchase any product which might compete with some of the stocks which the Commission is trying to get rid of at all costs.
I was not absolutely clear whether my right hon. Friend said that he is also treating this proposal as unacceptable. I hope that he is. If we can be told this firmly before the end of the debate, it

will be very satisfactory. However, I imagine that his acceptance of my amendment would make it clear that he is not prepared to agree to this proposal either.
Thirdly, the Commission is still pressing our old friend—or, rather, our old enemy—the ridiculous proposal for a tax on margarine, described as
vegetable and marine fats and oils".
I understand that my right hon. Friend perfectly clearly undertook that he will not accept this proposal either. If so, that would be another satisfactory result of this debate.
In conclusion, all this shows—both what is happening and what has been threatened—what immense damage is being inflicted on Britain by the common agricultural policy. I believe that the most disastrous result of all is the threat to a satisfactory pay restraint policy in stage 3 of a system which is artificially raising prices to the British consumer by about 50 per cent. above where they really need to be. What folly that is at present. If hon. Members do not accept that from me, I advise them to study the statements made in the past fortnight by the Consumers' Association and the Consumer Council which have made very emphatic representations.
For those reasons, if Britain is to get out of this straitjacket, and achieve real economic recovery, we need now a clear declaration that we cannot be bound and crippled any longer by the ever more damaging proposals which come out from Brussels under the common agricultural policy. Our amendment is intended to strengthen the Minister's hands in his negotiations. I wish him well in them and hope that he will have success on all the points that I have mentioned.

6.6 p.m.

Mr. Peter Mills: This important debate will throughout the evening air many of the problems and fears that many of us have about food, agricultural production and the common agricultural policy itself. The Minister's speech, to which I listened very carefully, did not deal with many important points. I think that he should have elaborated far more on the pig industry, particularly as the problems of that industry are so bad.
The Minister also merely touched on the question of co-responsibility, which is crucial. If British farmers have to accept a reduction in the covering of their costs and accept co-responsibility, I do not see why the responsibility should arise twice. British farmers are already paying £9 million this year in promoting the sale of milk and milk products.
The Minister was rather unfair to the agricultural industry in his comments about the cost of food to the consumer. He did not mention the rise in the cost of production to the farmer. He did not tell us of any efforts that he has been making to continue the beef premium, nor did he tell us much about the problems of people in the Community who produce milk simply for intervention. I agree with the many British farmers who believe that there should be a reduction in intervention prices for skimmed milk powder and other things.
In the Select Committee the Minister made a more widely based speech and filled in more gaps, in great contrast to the speech that he made to the House today.
Let no one think that this is an easy problem that can be solved overnight. It is a complicated problem, affecting conflicting interests. Let us consider the attitude of the consumer. She resents the rise in the price of food.

Mrs. Dunwoody: He.

Mr. Mills: He and she resent the rise in the cost of food. That is understandable. However, I should sometimes like to be told that the British consumer resents the rise in the cost of motor cars, television sets, and other such items. We never hear any protests from Labour Members about the rise in the cost of those items.
The attitude of the consumer is well understood. She says also that she is not getting as much money to pay for food, because the fall in the standard of living for many people is real. She also resents the high cost of imported food. Who is at fault there? Certainly not the British farmer. It is the Government's economic policies that have meant a fall in the value of the pound. We must not forget that 48 per cent. or more of our food is imported. British agriculture is not the enemy of the consumer; the enemy is

the Government, in their economic policies, which have meant a real drop in the value of the pound, with the result that the price of food has gone up. It is no good Members on the Government Benches smiling—they know that what I am saying is true.
The consumer feels very strongly about butter surpluses going to other countries. I could not agree more with the consumer. It is about time that the Community realised that if there are surpluses, consumers within the Community should have the benefit. Sometimes the consumer has to pay very dearly when there is a shortage of some commodity, such as potatoes. At other times, when there is a surplus, she should get the benefit. Schemes should be devised to deal with the surpluses within the Community. If such surpluses cannot be dealt with they should be sold outside the Community, but the consumer inside should be the first to have the advantage.
The consumer must realise, of course, that sometimes there is bound to be overproduction. A farm is not like a factory, where one can control events. Overproduction will happen, and sometimes it is wise to have it—it is good housekeeping.
Farmers feel very sore at present, because the Government have not really lived up to the promises in "Food From Our Own Resources". We saw a 10 per cent. drop in production last year and another 10 per cent. is expected this year. The increase in farmers' costs is running at £895 million, which is an enormous increase. Are not farmers allowed to try to recover their costs, just like manufacturers of motor cars and television sets? Why should the farmer be the only one to bear the increased burdens? Also, his increased burdens have been considerable—fuel costs, for example, which have a lot to do with the Government because of the fall in the value of the pound.
I have heard farmers say that they must have an increase, no matter how small, in the value of the green pound because that would be a show of confidence from the Government. If we do not get some devalution, no matter how small, British farmers will feel that their lack or confidence is justified.

Mr. John Silkin: The hon. Member talks quite rightly of an increase in costs


of £895 million. I will not ask him about the drought which affected his constituency. But whatever the reason for the increase—and drought played a part—a figure of £460 mililon, well over half, was due to the increase in cereal costs. Will he tell the House what a 5 per cent. devaluation of the green pound would have added to that £460 million?

Mr. Mills: I agree that there would have been an increase, but a small increase would be the token of confidence that British farmers require. No one wants parity but a small increase would give the necessary confidence.
Investment is dropping fast and British agriculture is not in a healthy position. I say to my farming friends—and I said this at Wincanton only last week—that if British farmers think they can ignore the results of over-production and high food prices they do so at their peril. Look what is happening to butter consumption, for example. There is no point in producing butter, even in this country, if it cannot be sold. British farmers must temper their demands with what is actually happening. There is the feeling that we must have restraint. All I ask of the Government is that they should not make it harder for British agriculture by the kind of proposals that we have had, such as tied cottages and taxation. All these measures weaken the confidence of British agriculture.
I turn to the Government's attitude. They are looking at short-term considerations only, not at the long-term issues. I can understand the overriding need for the control of food costs, but the Government do not help themselves with these difficult problems. Our economic position and our high rate of unemployment do not help the situation one little bit. Unemployment is no friend of British agriculture. The economic position that this Government have brought the nation is no friend of the consumer either. I believe that we must do everything we can to try to keep costs down, but we must realise that farmers must cover production costs or at least go a long way to doing so, otherwise production starts to fall. The Government must realise that as a fact of life.
Having watched the Community's track record—and I do not like saying this

because I am very pro-Europe—I think that it has not had the guts to tackle its problems. The real problem is that farmers are producing for intervention, and therefore for surplus. I agree with the Minister when he says that it is no good dealing with this problem only through price rises or reductions, and that it is for Government's nationally to deal with their own regional, structural problems. This should be done. It saddens me that the Community fears political reactions, and this stops it from taking steps that should be taken. It does not have the courage to deal with this matter. That is the nub of the problem.

Mr. John Ellis: Earlier, the hon. Member was critical about pigmeat, but the reality of the situation is that the common agricultural policy is at fault.

Mr. Mills: I do not agree. I think that the nub of the problem on pigmeat is the fall in the value of the pound and the widening of the gap. The mcas are enormous, and the subsidies given have clobbered our pig industry.
The Minister has done something to help, but it was too late, and the pig industry, particularly the bacon side, will take a long time to recover. I believe that the Community needs to put its house in order in certain areas. I do not believe that we can go on with the CAP in its present form. It must be more flexible. Certainly, when I was going round encouraging my farmers to support it, I always said that it should be flexible enough to meet the problems that arose. We cannot have a rigid policy. There must be a certain amount of national policy within the framework of the CAP.
Some of us were in Paris the other day and we saw signs that French politicians were beginning to attack food costs. Certainly M. Barre did so. They are concerned with certain areas producing only for intervention. I hope, therefore, that within the Community there will be different attitudes, nothing like so rigid as in the past. More flexibility is what is needed. I believe that it can be done, and I hope that, in this price review, this problem will not be fuzzed over. I believe that we have to get at the nub of the problem and deal with


it. It needs courage. It will be difficult to do it. I hope that we shall have from the Government a far clearer statement, dealing with these things in the way that I have suggested.
I accept again that it is an extremely difficult equation to try to reconcile these different attitudes, but I believe that it must and can be done. I only hope that we shall have a little more patience from some hon. Members on the Government Benches and that they will consider not only the needs of the consumers but also the frightening problems facing the British food producers.

6.21 p.m.

Mrs. Gwyneth Dunwoody: The hon. Member for Devon, West (Mr. Mills) will not be altogether surprised if I do not follow him—not least because, if he will forgive me for saying so, I find his arguments muddled.
There is no doubt that this price review is probably one of the most politically important that the Common Market has faced since its inception, particularly because of the impact that prices in the long term have, both on production and on the price of food in the shops.
We are eternally being told that one of the things that the common agricultural policy was designed to do was to protect the income of the producer, to ensure that the consumer would always he protected against food shortages, and to enable the agricultural industry as a whole to undergo certain structural changes in order to move towards greater efficiency. I welcome this opportunity to say, before the price review is completed, that I see not nearly enough movement in any of these directions in this price review. Perhaps Parliament has not yet taken on board the full impact of the political effect that the common agricultural policy is having at present. We are eternally being told that there are those of us who only speak for the consumer, but if there is one thing that frightens me about the policy it is that it does not do what hon. Members opposite who speak for the farming lobby are most concerned to see it do: it does not protect the income of the small farmer, it does not bring about structural changes, and it costs the taxpayer at every level a small fortune, and is continuing to do so.
Let us look at the main body of these proposals, which concern the dairy industry. The dairy industry in the Community as a whole is in gross over-surplus.
One of the reasons is that the units concerned are very small, each with a very small number of dairy cows. Over the years there have been attempts, by using non-marketing premiums and the sort of suggestions contained in this price review, to encourage small farmers to leave the land. It has not happened. It has not made the slightest difference to the dairy industry in real terms.
The British farmer, who has, over the years, had to become more efficient, is not the one who is contributing to the dairy surplus, yet if he endeavours to become more efficient he is told that, far from being able to supply his own consumers with the dairy produce they need at prices they can afford, he will be penalised by the Common Market for going against the general policy decisions of the Commission. That is monstrous nonsense.
The new Commissioner for Agriculture, when he took office, said that the common agricultural policy had been vindicated. Within two weeks he had to seek to change an export move in the butter market because of public revulsion at the idea that, in a Community where many people could not afford to buy butter, we had got ourselves into the absurd situation where in order to get rid of surplus stocks, we had to sell off that very product at uneconomical rates to nations outside the Community, just because the butter was deteriorating at the rate of 30 per cent. a year and would soon have to be shifted one way or another.
What is happening in this price review? We see the same negative response. We see the same suggestion that, although people cannot afford to buy butter, the Commission will nevertheless put a levy on margarine and vegetable oils to make it more difficult for the consumers to buy them. Again, because the Commission thinks that there is going to be an overproduction of sugar, it is to take action against isoglucose, which is not even a defensible challenge to the sugar market, since it is only used by manufacturers of foods because it happens to be in


liquid form and can easily be used in manufacture. We see suggestions for non-marketing premia in that case, although with no careful assessment of the effects. We see the suggestion that we should, perhaps, even move back towards the subsidy system for the marketing of butter.
How absurd it is that, as a nation, we did away, on our entry into the Community, with our whole system of food subsidies, only to be told now by the Commission that, because it happens to be politically useful at present, perhaps, we should subsidise the sale of butter, with a certain amount of assistance from the Commission, because that will get it off an unpleasant political hook. This is not political planning or economic sense, and it is not defensible. The situation has to be seen in all its magnificent absurdity.
The policy forces the taxpayer to pay when food goes into intervention after a certain level. It forces the taxpayer to pay to maintain that food in intervention at very considerable cost. It is then decided to export the food because that is the only way to get it off our market, and the taxpayer is forced to pay yet again, this time for export subsidies. Meanwhile, in the shops, the very people who as taxpayers are supporting this bizarre policy are having to pay for the goods five times the price they need pay under a normal and a balanced system.
If anyone thinks that there is political will to change that policy, I point out one thing. In this country we have the Milk Marketing Board. It was brought in precisely because at a certain time the income of the farmer and the interests of the consumer needed to be equally safeguarded. The Commission's attitude towards the Board is plain. It has been voiced more than once. The Commission says "This machinery is not acceptable because it contravenes the Treaty of Rome, and because it does so the Board must disappear." What, then, we ask, being the poor simple little creatures that we are, is the alternative suggestion? Answer comes there none. Indeed, the hon. Member for Norfolk, North (Mr. Howell) was beaten to his knees for daring to suggest in the European Assembly that the Commission should look at the whole question of the Milk Marketing Board to

see whether it did not produce the sort of pattern for the future which would enable us to balance consumer interests with the whole question of production. That has not been acceptable to the Commission at any point.
The reality of the common agricultural policy—and it needs to be discussed in this House far more often than it is—is that it is geared at present towards keeping the small and inefficient farming unit going simply by seeking to find prices that are acceptable to those farmers; that it offers open-ended subsidies to all sorts of sectoral interests, such as tobacco growers in southern Italy, lemon growers and silkworm cocoon growers; and that it offers absurd and immediate remedies for situations in wine and olive oil production which cannot be defended. Never at any point does it produce a sound and sensible policy which can be defended to the consumers within the Community. We cannot continue in the way that we are going. The CAP must not be allowed to remain untouched.
There is no evidence of any political will inside the Community to bring about the radical changes which only will save us. I say this because I believe that the pressures on Britain to revalue the rate of the green pound owes little to the desire to see structural change in the Common Market or the achievement of common prices, but much more to a desire to open up markets that are easily organised and easily available. The attitude of the Community as a whole is that it must take temporary measures, always in a negative sense, to try to redress the position that the policy itself has created and will continue to create.
The price mechanism is not the only thing that will affect the future of agriculture, but it is one of the basic things, because farmers will change their forward planning in accordance with this year's price review. The consumer will be forced to buy less and less of more expensive products.
In the final analysis, the Community itself will be faced with such political pressure that all of us as politicians will no longer be able to come to the House and say that the policy must be changed: the pressure on us and on our constituents will be so great that the whole thing will fall apart almost in front of our eyes.
I say to my right hon. Friend the Minister that perhaps one of his greatest abilities is to speak plainly, as he has spoken plainly, about the real implications of the CAP; and he has sought, for once, to put them in terms that are understandable to the Members not only of this Parliament but to the Community as a whole. In doing so he is performing an immeasurably valuable service.
I do not envy him his task. However, if he fails, and does not bring about very radical and revolutionary changes in the CAP in the next 12 months, there will not be just a problem of what the consumer pays. If unforgivable political pressure is put on people in the Community they will respond in a violent way. It is not the first time that people have regarded the price they pay for food, especially for staple foods, as one of the most important questions in the political spectrum. It is an attitude that they have taken before and will take again. I never thought that in this country we would be faced with this reality and this political difficulty. The lead must come from here. Unless these changes come about, the political consequences of the CAP will be far greater than many hon. Members are yet prepared to accept.

6.33 p.m.

Mr. Geraint Howells: I have listened with interest to the debate, from which one thing is clear. Members on both sides agree that major reform is required in the CAP in the next 12 months if agriculture is to survive in this country.
I congratulate the Minister, as I have done previously, on his stand on behalf of the pig industry. I was delighted that he stood firm, and I hope that he will do so again with other commodities. During the last six months I have read with interest of the way in which consumers have been trying to persuade our agriculture Ministers not to increase food prices. I received a letter for the first time from the National Consumer Council, dated 9th March, and I am sure that many other hon. Members received similar letters. The letter states:
Dear Mr. Howells, EEC food prices are too high. So major United Kingdom consumer organisations have joined together for the first time to lobby Members of Parliament on the European Commission's farm price proposals for 1977–78.

I am sorry that the day has come when consumers are opposing price increases in this country.
I have also read in many agricultural papers recently that our present Minister of Agriculture is consumer-oriented. We have read that the EEC Commissioner for Agriculture is consumer-oriented and that the previous Commissioner was producer-oriented. It is up to the Minister to defend himself one way or the other.
I believe that we should have two Ministers on the Front Bench—I know that we have three agriculture Ministers—one responsible for agriculture and another responsible for food, although I do not know whether that will ever come about—[An HON. MEMBER: "Fisheries."] Perhaps we could have a separate Minister for fisheries as well.
I declare my interest in the subject. I am very worried that at present in this country production is on the decrease, consumption is on the decrease, and, worst of all, we waste 20 per cent. of the food that we produce. A great deal of homework will have to be done in the near future.

Mr. Leslie Spriggs: The hon. Gentleman has told my right hon. Friend the Minister that a change in the CAP will have to take place in the next 12 months. Is he aware that we cannot change the Treaty of Rome unless France and other beneficiary countries agree? They have the power of veto, and they will use that power of veto to stop any change.

Mr. Howells: I agree with the sentiments of the hon. Member for St. Helens (Mr. Spriggs) but I think that there is something more important than a veto, namely, influence. I believe that the British Government and British agriculture, of which we are so proud, will be able to influence not only the Commissioners in Brussels but our counterparts producing food in Europe. If we could persuade them to come to this country and see how our marketing system operates in comparison with their own, they would learn a great deal.
The biggest mistake that we ever made was to do away with the guaranteed price deficiency payments, which operated so well in the past 20 or 30 years. There


is no point in arguing whether we voted for or against entry into Europe. The previous Government did the damage by doing away with the guaranteed price system that had operated successfully in this country. We still have a guaranteed price system for lamb and sheep. The intervention system of buying must be scrapped. I hope that the Minister will stand firm on that point.
The hoarding of meat is old-fashioned. Meat was hoarded in biblical times. Meat should not be put in cold store for months at a time. In the last two or three years we have lost the guaranteed price system for beef, we have lost the beef cow subsidy, we have lost the lime subsidy, and we are about to lose our boards.
If a milk marketing board such as ours were operating in Europe there would be no surplus of butter or milk. I still believe that not one European country is over-producing any commodity, including milk. The main reason why food is being put into store is that it is being sold at too high a price in France. If butter and milk were sold at a reasonable price there would be no over-production of butter in France. Therefore, let us try to persuade our counterparts to abandon the intervention system that operates in Europe. I advise the Minister to stand firm and to refuse to accept any more directives and orders from the EEC.

Mr. Torney: rose—

Mr. Howells: The hon. Member must be patient. I know that he wishes to speak.

Mr. Deputy Speaker (Sir Myer Galpern): I think that the trouble lies in the way that the hon. Member for Cardigan (Mr. Howells) is holding his papers. He gave the hon. Member for Bradford, South (Mr. Torney) the impression that he was on the last page of his notes, which was why the hon. Member sought to rush in.

Mr. Howells: I turn now to the documents in question. They deal with an appraisal of the agricultural situation in 1976 and they serve as a basis for the 1977 price review. Several recommendations are made by the Commission for 1977. The British Government do not agree with all the proposals. The three most important areas dealt with are milk,

beef and pigs. One of the Commission's main recommendations is for the devaluation of the green pound. Both the National Farmers' Union and the Farmers' Union in Wales agree with the necessity for that step. The right hon. Gentleman says, however, that the Government's position is that a change in the value of the green pound can be made only in the overall national interest, and I agree with those remarks.
Various proposals concerning changes in the prices of certain commodities are especially important because of the price review. The most important part of the documents, however, relates to the policy implications involved in implementation of the recommendations. Two particular proposals are especially important. They are the devaluation of the green pound and the likely abolition of our marketing boards, particularly the Milk Marketing Board. Here, I declare my interest as vice-chairman of one of the marketing boards, which I hope we shall be able to retain.
One gets the impression from examining these documents that a complete reappraisal of the CAP is needed, that there must be a fresh look at its aims, its direction and its application to British agriculture. British agriculture is far from healthy. Farmers all over Britain are disillusioned with the lack of help that they are getting in their work—work which is crucial not only to the British economy, because of its importance to the balance of payments through providing alternatives to imported food, but because if British farmers are unable to produce food for our people Britain will be short of food.
If we want the land to feed us we must feed the land. This debate is part of a general continuing appraisal of Britain's agriculture and of the CAP, and I welcome it for that reason. However, we want something more than an occasional debate on agriculture when a price review is on the horizon and when there is nothing more pressing for the House to discuss. I should like a Select Committee on agriculture to be established, its terms of reference being to give priority to the British marketing procedure, the green currencies and Britain's rôle in the CAP.
Such a Committee would be able to keep abreast of the numerous directives


emanating from Brussels far more effectively than the House can do. It would be able to consider at length such matters as the delicate balance of consumer and producer interest. It could consider a suggestion that I made recently that the whole of Wales should be a "less-favoured area" under the definition of the Commission. It could also consider the viability of the present marketing systems in use in the Community. It could also seriously consider whether the CAP should be—

Mr. Marten: Scrapped.

Mr. Howells: No, not scrapped; we need a CAP. My right hon. and hon. Friends have for long called for a fundamental reform of the CAP, and we do so again now.
One of the greatest failures of the CAP has been its inability to achieve a sensible and rational pricing policy. The present policy is inflexible, and that is where its weaknesses lie. It is nothing short of criminal that butter should be sold off cheap to the USSR when it is so expensive in British shops that many of our people are having to buy margarine. EEC prices should be made more flexible in order to allow for fluctuating supply and demand while at the same time maintaining adequate prices for producers.
My colleagues and I have long argued that EEC prices should be brought into line with world prices. That would help to even out some of the worst discrepancies in European prices.

Mr. Richard Body: Since the hon. Member is expressing the view of his party, will he say whether on this occasion he and his colleagues will support the amendment in the name of the right hon. Member for Battersea, North (Mr. Jay) which begins by urging the Government
to press for easier access into the United Kingdom for efficiently produced foodstuffs from outside the EEC".

Mr. Howells: Yes we shall.

Mr. Deputy Speaker: Order. I wonder whether, before the hon. Member for Cardigan (Mr. Howells) resumes his speech, he would be good enough to move slightly to his left. He seems to be standing on a creaking floorboard and

the noise is being amplified through the system and is disturbing us. I am serious about this. Will he please move off the creaking floorboard?

Mr. Howells: I shall take your advice, Mr. Deputy Speaker, and I shall also begin a diet tomorrow.
May I reply to the question from the hon. Member for Holland with Boston (Mr. Body)? I can assure him that we support the amendment.
The sooner there is a European Parliament which has increased moral authority resulting from its consisting of directly elected members the sooner we shall have a proper forum in which to thrash out these problems and in which our views will have a chance of being heard.

Mrs. Dunwoody: Does the hon. Member accept that if he had just spent two days in the agriculture committee in Europe, as I have, he might not be so firmly of the opinion that the European Parliament will necessarily mean any change in the CAP?

Mr. Howells: I accept the hon. Lady's views, but I believe that many changes can be made to the CAP. The Minister has stood firm on one or two occasions and I am convinced that he will do so again, so that the future of British agriculture will be sound and, given the right incentives, will be able to supply consumers in this country with food at reasonable prices.

6.49 p.m.

Mr. Thomas Torney: First, I congratulate my right hon. Friend the Minister for the stand he has been taking against almost immeasurable odds. In case he intends going off for his dinner shortly I propose to make the end of my speech now. I want to appeal to him to do something more—dare I say?—at United Kingdom Cabinet level about the stupidity and hopelessness of the CAP. Hard and effective as his work in Brussels may be, it alone is not sufficient. The entire British Government should make it clear that if there is not a fundamental change in the CAP, or if it is not scrapped, assuming that fundamental change cannot be made, this country will be compelled to take unilateral action. This is the type of matter that should be discussed at Cabinet level.
I do not know whether my right hon. Friend noticed that I made one or two comments in the Press about the butter scandal. Since then I have been inundated with letters and approaches from many people—even in the streets—supporting what I said. Those people were shocked that butter was being sold off so cheaply to a foreign country when we have to pay greatly inflated prices in the shops. They imagined that our Minister or Government could change that. The mass of the British people are working themselves up to a tremendous feeling about the activities of the CAP, not only in connection with the butter scandal. The Government should take heed of that.
From the letters and approaches that have been made to me it is clear that the mass of the British people did not understand that when they voted for our remaining in the Common Market they were voting away their right to opt out of an activity that is so utterly stupid.

Mr. Marten: The hon. Member advised the Cabinet to be unanimous. Would it not strengthen the matter if Parliament as a whole discussed the system and voted upon it so that those who support that ridiculous system can stand up and be counted?

Mr. Torney: I agree with the hon. Member for Banbury (Mr. Marten). That would be a good idea.
During the butter scandal some hon. Members and I signed a motion condemning the EEC's action and calling for a basic change in the common agricultural policy. That motion was signed by over 100 hon. Members from both sides of the House, and some of them were those who supported our entry into, and our remaining in, the Common Market. The suggestion of the hon. Member for Banbury would probably have an even greater impact, and I commend that suggestion to my right hon. Friend.
It is incredible that the Opposition, when in Government, took us into the Market and that my own Government agreed to our remaining in, when the slightest examination should have made clear that the type of activities that are now taking place would occur. We are now experiencing the butter mountain. Before that it was beef; before that,

butter; and before that, wine. That situation is bound to exist under the present policy. I cannot understand why seemingly honest, sincere members of the Conservative Government, and some of my own Front Bench, could not see what would happen. They may well have deluded themselves into believing that they could negotiate a change in the CAP.
I do not believe that that is possible. Let us examine why it is not possible. The fundamental defect in the policy is that it was designed before we entered the Market. It was designed primarily for nations that are mainly self-supporting in food. Everybody knew that when we argued about entering the Common Market. Everybody knew that we produced about only 50 per cent. of our own food. That is why our prices have shot up, and will continue to do so till the Community level is reached. Before entry to the Community we bought half of our food in the markets of the world, not in the Common Market.
My right hon. Friend the Member for Battersea, North (Mr. Jay) said earlier that New Zealand could supply us with large quantities of butter at less than half the price our housewives are paying now. That is true. Yesterday I spoke to the New Zealand shadow Minister for Agriculture. He pleaded with me to help to increase the amount of butter imported into Britain from his country. He said precisely what my right hon. Friend for Battersea, North said earlier—that New Zealand could supply butter much cheaper than we can buy or sell it under Common Market instructions.
The basic principle was wrong and we should never have entered the Common Market knowing that we produce only half of our own food and that the original Six nations of the Community wanted to protect themselves because they are mainly self-supporting. French agriculture and much of the Community agriculture outside Britain is grossly inefficient. About 1½ million farms in the Common Market countries, and many in France, have 10 cows or fewer. Surpluses are created and prices are fixed on the basis of that type of inefficiency.
There is also a political issue involved. The farmers represent an important part of the electorate in France. France will


never agree to the conditions that we and our Minister want because that would put their votes at elections in jeopardy. That is why I say that we must be forceful both in the Cabinet and in the House.
Far be it from me to say "I told you so", but through speeches in the House or through the publicity in the Press given to those speeches, the British people must be made to understand that the responsibility for the present malaise is clearly on the shoulders of the electorate who, perhaps through a misunderstanding, agreed to remain in the Common Market, and upon those on the Front Benches who agreed to our entering and remaining in. I find it difficult to believe that the latter had so much misunderstanding about all this, as the mass of the British people, according to the letters that I am receiving, so obviously had.
There is a great crescenda of feeling in the country. I go along with one of my hon. Friends who was hinting that if something like this comes out again, if there is another massive sale of butter, beef or something else to a foreign country, Russia, or the oil-producing countries—some of the butter has gone there—and if it is sold at a fraction of the price that our wives are having to pay in British shops, there will be trouble in this country. We are not paying merely through the nose but through the ears and the eyes as well. That cannot be stated too often. We pay taxes to keep food in intervention. We pay taxes for the inefficient farmers who are being subsidised in producing this stuff so that it can go into intervention. When there are full stocks in intervention and we have to get rid of them, we pay taxes to sell them to Russia or somewhere else, and at the same time we sell them in our shops at tip-top prices.
When I and many of my hon. Friends were trying to persuade people to vote to come out of the Common Market, perhaps one of our propaganda efforts should have been this: "The CAP means that you do not produce food to eat but produce it to put in store." To me, nothing could be more stupid and ludicrous. We must somehow take firm action to change the policy. It is not at all a matter of "stinking fish" or of some of us feeling aggrieved because we lost the battle over the Common Market. It is nonsense.
It involves the economy of our country. We all know that shortly there will be talks, if they are not going on already, on another phase of pay policy. Success in such talks will affect our economic situation. Both sides of the House can agree about that. Any success that can come out of those talks must be governed by the cost of living, but in one fell swoop the cost of food will jump by 2 per cent. for the mere coming into line with CAP prices. Then, if the Commission's proposals are adopted, in another fell swoop we shall have another 2 per cent. put on our food prices. This makes a 4 per cent. increase, and 17p on top of the already high price of butter. If that is not stupidity, I do not know what is. For cheese I think that the increase is Sp in the transition and 4½p for the overall increase required by the CAP—9½p. One could go on in relation to eggs, bacon, pork and sugar, the prices of all of which will rise because of the stupidity of this policy.
I must comment on the Milk Marketing Board. Only at the end of last week, a group of Labour Members went to the Dairy Council so that it could talk to us about milk. It was complaining, very rightly, that the removal of our subsidies on milk had caused sales problems. Less milk was being sold. The Dairy Council was appealing to us to do something about restoring free milk in schools—a good point. It was appealing to us to publicise the existing rights of people in need to get free milk through the various social service benefits. It was very concerned about the suggestion that the Milk Marketing Board may be abolished by the Common Market rules, and that we may even lose our doorstep deliveries.
Here I must declare an interest. I am sponsored by the Union of Shop, Distributive and Allied Workers, which is the main union covering the lads and lasses who deliver milk to our doorsteps. The supply of milk on the doorstep to the housewife is an institution. It gives work to many thousands of people. Above all, it keeps our sales of liquid milk high. British sales are not absolutely the highest, but they are fairly high. There would certainly be a slump in liquid milk sales if we were forced to discontinue our doorstep supplies and if our Milk Marketing Board were abolished.
It is obvious to me, from the speeches that I have heard today and in previous agriculture debates, that there is a great body of opinion in the House that will fight tooth and nail to stop the Common Market interfering with our Milk Marketing Board. My right hon. Friend the Minister, far from allowing its abolition, should be going to Brussels to extol the advantages, not only over a short time but over a great number of years, that the Milk Marketing Board has given to our dairy industry and, indeed, to the agricultural production side of the industry. If we can do nothing else, we should be telling the rest of the Common Market that we would willingly show our system to it and that its adoption throughout the Common Market would be of benefit in helping with the tremendous surpluses.
However, the major effort to avoid the surpluses is to take the inefficiency out of Common Market farming—not British farming, which is efficient. Our dairy farming is most efficient. We have the right climate, and so on. We must take the inefficiency out of farming in France and other countries.
That reminds me of another stupidity of the Common Market—oranges. Lemons have been mentioned, but I mention oranges. The oranges we eat are supplied mainly by Israel, Spain and Africa. Less than half of 1 per cent. are supplied by Italy, but the price that we have to pay for our oranges is dictated by that half of 1 per cent. that we get from Italy because Italy is in the Common Market. Production in Italy is grossly inefficient. Italian prices are higher than those in the rest of the world. That is another utter stupidity of the CAP.

Mr. Marten: The hon. Gentleman has been saying that the CAP must be completely changed. I say that the CAP should be scrapped; he says that it should be changed. Is he not aware of a broadcast by President Pompidou who said, I understand, that, unlike his predecessor, General de Gaulle, who said "Non" to us about our entry, he allowed us to enter provided that we did not radically change the CAP? Is that not so?

Mr. Torney: I am not aware of that statement but I fully accept what the

hon. Gentleman says. It reinforces what I and other hon. Members have said—that there is very little chance of getting change by the kid-glove method. Hence the fact that we must be more forceful.
That is perhaps a closing note for me to put to the Minister, as I commenced. We really must be more forceful, and we must get the backing of a vote in the House, because on the CAP aspect of the Common Market there would be a very different vote now from that which took place when we voted to enter the Common Market. That should strengthen the arm of my right hon. Friend when he goes to Brussels and to the Cabinet to demand the kind of action I have been trying to demand today.

7.10 p.m.

Mr. Alick Buchanan-Smith: The hon. Member for Bradford, South (Mr. Torrey) was correct in at least one thing. He said that the Minister would not be able to stay for the whole of his speech and that has happened. The hon. Gentleman said that he would make his speech back to front to accommodate the Minister, who had to leave. I am disappointed that he left. I wantd to start by commenting on the Minister's speech, but I quite understand why he is not present.
I take exception to what the hon. Member for Bradford, South said about less efficient producers in other countries. If we believe in being international, we should be interested in those producers. The part we play in forming policy can show that we are concerned as well. One of the significant things about entering Europe—although some hon. Members may take a different view of our own interests—is that the British farmers, through membership of COPA, the union which embraces all farmers throughout Europe, have been prepared to take an interest in producers in other countries, some of whom are less well off and less efficient than ours. They have shown an international attitude and outlook which is an encouraging result of our entering the European Community.
I should like to take up a number of points from the Minister's speech and I shall be grateful if the Under-Secretary would take note of them. First, the Minister said—I accept that he is


responsible for food as well as agriculture—that high prices are not necessarily in the farmers' interests. He is right in that. To some extent this has effected consumption. But the Minister should not emphasise that alone. He mentioned pork, but relative to other commodities the price of pork has fallen and consumption has increased. He must remember that, although consumption may have increased, production is falling. Although for a short time the consumer may have certain advantages, the Minister has the responsibility for the availability of supplies later. To be fair, he must look at that as a whole.
The Minister also mentioned the green pound. In this I support my hon. Friend the Member for Devon, West (Mr. Mills) who made one of the most effective and powerful speeches in this debate. As he said, adjustments of the green pound are fundamental to the economics of our farming industry. But no one is saying that we should adjust in one. The Minister must realise that responsibility for the green pound—there is now a tremendous gap in the value of the currencies—lies not with the farmers but with the Government through their economic policy. The Government must take that responsibility.
That is the reason why the farming community is so frustrated and dissatisfied at present. It is no use saying we cannot do this. The farmers can do nothing to help towards it. They are relying on the Minister of Agriculture to help them in the position in which they are placed, not through their fault but through Government policies.
The Minister was absolutely right to say that in applying proposals which the Community put forward to restrict some of the commodities in surplus, such as dairy products, we should not necessarily apply them right across the board to every country in the same way. I ask him to practise the same flexibility which he asks the Community to practise. His inflexibility and unwillingness to carry out some of the adjustments necessary, for example, in relation to the currency, are making the Community much harder in its attitude towards some of the things our Government rightly want to achieve. When he is asking the Community to be flexible, the Minister should realise that

flexibility is a two-sided thing. He must be flexible as well.
Another point in the Minister's speech, a small one and one in which I have a direct interest, relates to retailing milk. I was interested in the tribute the Minister paid to the important part played by the milk distribution industry and the Milk Marketing Board. With respect to the Milk Marketing Board, when it comes to putting the milk on the doorstep the responsibility for distribution lies with the countless large and small firms up and down the country and individual enterprises.
I ask the Minister to take one small and more limited point. I had not intended to make it until I heard what the Minister said. I ask him to remember that those in the liquid milk distribution industry are facing a difficult time, as is everyone else. Their margin is fixed by negotiation with the Government. They have no control over the price. Theirs is the only industry in the country whose margin is totally controlled by the Government.
I do not know what the position is in England and Wales but in Scotland there is considerable worry and concern about the way the margin for the distribution of milk is worked. I do not want to make a big point of this, but if the Minister is sincere in his desire to encourage the sale of liquid milk in this country, I ask him to look at the Scottish situation. The situation may be the same south of the Border. Soon in Scotland the compulsory sale of pasteurised milk will he introduced, unless it is brucellosis-free. In a few years' time it will be possible to sell only pasteurised milk in liquid form.
In country areas, small producer-retailers and small retailers will face much higher costs. In most cases, if they sell, as they do in Scotland, a premium graded milk, subjected to far higher health standards, they will see a reduction in the price that they can charge because that grade of milk will soon disappear and they will have to sell pasteurised milk. The expenditure to do that will be higher than at present. I ask the Minister to look at this and to pay attention to the liquid milk distributor, if he is sincere in encouraging the sale of liquid milk.
My main point concerns the crisis which the pig industry in Britain is facing at present. The industry has gone through many difficult times in the past but it is now facing the worst for nearly 10 years. In that industry there is a realisation and understanding that it is, and always has been, subjected to cyclical changes. Sometimes, there are good returns, at others there are losses. What marks the present situation off from the difficulties of the past is that the trough is deeper and to some extent much more prolonged than almost any period of low prices and low returns that the pig industry has ever gone through in recent years.
I welcome the contribution the Government made to the industry with the temporary subsidy introduced in January. That is a useful and helpful measure. I have been looking at the figures and prices for pig production in Scotland from 20th January, when the subsidy was introduced, to 10th March. Bacon prices were £6·36 a score on 20th January. On 10th March, they were £5·94 a score, so the subsidy had been more than eliminated by the fall in price. The price for cutter pigs, which are the main contract for pigs in Scotland, was down from £6·24 to £5·88. The price paid by Lawson's Bacon Factory in the constituency of my hon. Friend the Member for Aberdeenshire, West (Mr. Fairgrieve) who has been making strong representations about it—this is the price which most affects my constituents, from whom I have had direct representations in the last few days—dropped from £6·24 to £5·74.

Mr. Russell Fairgrieve: Since my hon. Friend has mentioned my constituency, in which Lawson's is situated, does he appreciate also that the present industrial worries and troubles in that factory are connected with the lack of morale arising from this situation, and that through-put in the factory is now down by a third?

Mr. Buchanan-Smith: I am grateful for that intervention; there are other serious difficulties facing that factory.
The figures that I have have been given to me by producers in the North-East of Scotland and in my constituency. The Convenor of the Pigs Committee of the Scottish NFU, Mr. Cargill, is a constituent

of mine and I had the figures verified this morning. They show that even the temporary marginal help which the Government gave in January has been more than eroded as a result of the fall in price in the following two months.
The position in Scotland is not quite as bad as in the United Kingdom as a whole, but the official figures of the Meat and Livestock Commission showed a net loss on the net margin of £1·62 per pig. It improved marginally in February as a result of the Government's action, but in March, because of the fall in the price of pigs, producers are now facing a similar net loss to that in January.
What effect is all this having on the industry? I mentioned the relationship between prices and production. From 7th August until early March this year—it was in early August that the MLC costing figures first showed the pig industry production side going into unprofitability—the numbers of sows and boars slaughtered have increased by 28 per cent. compared with the similar period 12 months before. On weekly United Kingdom figures, we find that in the week ending 12th March 1976, slaughterings totalled 6,500, compared with 10,000 in the same week this year—an increase of more than 50 per cent. It is no wonder that the leaders of the Scottish pig industry have asked whether this trend represents the forced destruction of the pig breeding herd in the United Kingdom.
I have painted the picture fairly starkly, but these figures are substantiated by responsible official bodies in Scotland. My real question is, what is being done? I have put the case strongly so as to strengthen the Government's arm—I was encouraged by what the Minister said—in their attempts to change the basis of the pigmeat mcas. If we could change from the intervention price basis to a cereals price basis, that could help to alleviate the problem in the short term. I hope that any action will be taken quickly.
We can get far too emotional, in some cases hysterical, about surpluses. I strongly endorse what my hon. Friend the Member for Mid-Oxon (Mr. Hurd) said. If we had not been working the surpluses, if we had not had the CAP in 1974–75, and, through our membership


of the Community, access to its food supplies, we should have paid far more for our food.
As my right hon. Friend the Member for Yeovil (Mr. Peyton) said, we must get this matter into perspective. The so-called mountains amount only to a few days' or weeks' supply when set against the total resources of the Community.

Mr. Lee: Dealing with just one aspect of the accumulation of surpluses, does the hon. Gentleman think that it contributes to the well-being of the Community and the sustaining of a proper food supply that in many cases the food which is accumulated is denatured and downgraded, for example as feeding stuffs?

Mr. Buchanan-Smith: Yes, I do believe that it contributes and that the basis of the CAP in budgeting for a surplus is correct. In some of its application it is wrong and needs reform, but the fundamental thinking behind it is right. All Governments have a responsibility not only for the price of food but also for the security and continuity of food supply.
When we go through periods, as we have recently and will again when food is in short supply, unless there is some budgeting for surpluses, the consumer is held to ransom. The housewives of this country, for example, were held to ransom over the price of potatoes, simply because our potato producers were not getting the encouragement they deserved. Because the Government of which I was a member in 1973–74 did not give this encouragement and production was cut back—it was due also to weather problems, of course—the consumers were held to ransom. There is nothing wrong or immoral about budgeting for surpluses if one intends to fulfil the responsibility for continuity and security of supply.

Mr. Gould: Would the hon. Gentleman not agree that the price of potatoes was eventually reduced to the consumer by a relaxation of the Community rules to allow imports from cheap producers outside the Community?

Mr. Buchanan-Smith: Potatoes, of course, are not covered by the CAP, yet the consumer was held to ransom. There is a lot of confusion over this matter, with many people blaming the CAP for the

potato problem. That is not fair, considering the production background in this country.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang): My hon. Friend the Member for Southampton, Test (Mr. Gould) is right to this extent—that, although there is not a common regime for potatoes, there is a common external tariff. That tariff is at present suspended and only yesterday I was asking in the Council of Ministers whether that suspension could be extended even further, into April.

Mr. Buchanan-Smith: I am grateful. I apologise if I misled the House. Potatoes are not covered by the CAP but they are covered by the common external tariff. The Minister's intervention underlines the Community's flexibility in meeting situations like that.
One would be very foolish to condemn the Community simply on the grounds of the CAP. Its benefits go far wider—into politics, defence and so on. I believe in the fundamental basis of the CAP, of budgeting for a surplus. We must of course always be ready to reform it and to make it more realistic. As one who believes in Europe, I would say that if the Community and the Council of Ministers do not show themselves flexible and prepared to reform sensibly, the EEC will fail in the longer term. It is a test of the Community to show that it is prepared to reform the CAP sensibly.
It may be that at the end of the day we should not look at this simply in terms of intervention and of storing up surpluses. I am flexible on this. Maybe we should look at such methods as intervention for commodities that can be stored. For other perishable commodities the deficiency payments system may be right. The common agricultural policy and its deficiencies have become a pawn in this political game that is played by those who are for or against the Common Market. Producers and farmers want to get on with the job of producing food. Promises and encouragement were held out to them by the Government in the White Paper "Food from Our Own Resources". All that they and I ask is that the farmers of this country should be given the opportunity of getting on with the job.

7.31 p.m.

Mr. John Ellis: I shall attempt to be reasonably brief. A remarkable document has been produced for hon. Members by the National Consumer Council in association with the Consumers Association. It says:
The Commission's proposals include an average increase in CAP farm prices of 3 per cent.; a devaluation of the Green Pound of nearly 6 per cent.; and a number of devices to fulfil the objective of maintaining producers' incomes. In addition, the UK is committed to completing 'transition' this year. Transition is the step-by-step raising of prices to full European levels, a process we agreed to when we joined the Common Market.
The overall result with transition would be to push up food prices in the shops this year by 4 per cent.—£600 million on consumers' expenditure on food, or about 70p on a family's weekly food bill. This is over and above increases due to general inflation.
For example, transition will add 12p to the cost of 1 lb of butter, green pound devalution of 6 per cent. will add 3p, and the 1977 proposed price increase will add another 1½p, giving a total extra increase this year on the price of butter of 16½p.
Some hon. Members, especially the right hon. Member for Yeovil (Mr. Peyton), have said today that they blame the present situation on the Government's mishandling of the economy, but part of the problem is the fact that we are in the Common Market anyway. Since that is so, it should be recalled that one of the promises held out to us at the time of joining was that our overall economic position would improve. It brings a hollow and cynical smile to many of us who fundamentally disagreed with joining the EEC when we realise that the basic terms and promises that were held out in order to induce people to agree to our going into the Common Market have not materialised. Instead, this old excuse is being used.
I welcome what the consumers' associations have done. One of the 19 organisations associated with this document is the National Federation of Women's Institutes. It represents producers' as well as consumers' interests. I am sure that hon. Members on the other side of the House realise that the Women's Institutes of this country are largely made up of farmers' wives. They have associated themselves with this document which says that food price

rises should not be tolerated. They know the difficulties that their husbands face.
The hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) waxed lyrical and produced documents to show what the pig producers are getting. I do not dispute that figure. But I wonder where the hon. Member was when the Minister was weekly having questions put to him on this matter. The Minister said that he was trying to renegotiate mcas under the present régime. The hon. Member for North Angus and Mearns finds satisfaction in the fact that the Minister has revealed that he is still trying to do it. But now that we are in the Common Market, we find that if something does not suit other member States they can discourage speedy negotiations. It is all very well for the hon. Member for North Angus and Mearns to speak as he did about pigmeat and then expect the Minister to go to Europe and to bang on the table, but my right hon. Friend has no strength in his arm then and must try to find agreement.
During debates in the House on pig meat, the Minister has repeatedly said that he is seeking urgently to have mcas altered. That is still the position. Hon. Members who wished to go into this absurd system now shake their fists and say that the Minister is not doing enough. There is another alternative, and I have the right to press it on the Minister. He can take arbitrary action and go it alone. That is exactly what the Minister has had to do in the end. Hon. Members should not advocate the principle of the Common Market and everything that it entailed—and that includes CAP—and then criticise the Minister. Do they want him to take more arbitrary acts of that kind? It is a logical position for me who does not believe in the efficiency of the CAP anyway, but if hon. Members, including the right hon. Member for Yeovil, want to criticise the Minister on pigmeat or anything else, they should have the courage, when challenged, to suggest alternative policies, to say that CAP is a disaster, and that it must be scrapped, and that we must move to a better system. One hon. Member asked, in a travesty of a speech earlier, who would speak for the farmers, because the consumers are always well represented. That is not true. The trade union movement speaks through the TUC for the


person at work. The TUC speaks well and puts power behind the worker. The employers through the CBI, and farmers through the NFU, have powerful lobbies. I do not argue about that. The person in society who is poorly represented and who has no strength to his arm is the consumer. Therefore, I welcome the fact that the consumers associations, representing so many bodies—and I think they are a little alarmed about the way in which these figures will be treated because they are non-political bodies—have a right to tell the Government or the Opposition or anybody else that if they do certain things they will result in certain other things happening to consumers. Nobody has challenged the figures that have been produced.
It would be a mistake not to realise that we are now seeing the revolt of people in this country through the consumer movement. The movement will be more vocal and it will not tolerate surpluses being built up and sold to people outside the Common Market at low prices when those foods are denied to consumers here. I want to make my position clear.

Mr. Fairgrieve: How can politicians in the advanced nations of the Western world talk about surpluses of food when two-thirds of the world's population is undernourished?

Mr. Ellis: I fully agree on that point, and that is one of the reasons why I am making such an angry speech—it is because we have such surpluses and there is a danger of their going bad. That is why butter is being got rid of at such ridiculous prices. That is absolutely stupid, and the hon. Gentleman has reinforced my argument.
The Minister made a good speech. It has been criticised merely on points of detail. No alternatives have been put forward. The Opposition Front Bench spokesman did not say whether his party wanted CAP to be scrapped or what he wanted done with the green pound. If I can do anything for consumers, it is to stand foursquare behind them. We shall see a radical change. Consumers will become a force, and when such policies are being carried out it is right that they should. Present policies are illogical and absurd and it is time—whatever Government are in power—for us to refuse to

go along with this absurd agricultural policy.

7.40 p.m.

Mr. Marcus Kimball: The hon. Member for Brigg and Scunthorpe (Mr. Ellis) represents a part of the country that gave the second biggest "Yes" vote in the Common Market referendum. That shows that most of the people in Lincolnshire have a sound knowledge of what the EEC is all about.
We are all familiar with the consumer document from which the hon. Gentleman quoted, but there is another view on it. The document shows a certain lack of understanding about the workings of the common agricultural policy. It says that all increases in institutional or guarantee prices are reflected in food prices, but this does not apply when the market price is above the guarantee price and there is no question of intervention. Higher intervention prices life the point at which Government support becomes operational and this gives farmers confidence and a firmer base for any investment or modernisation that they may wish to undertake.
The debate is taking place against the background of this year's EEC's equivalent to our annual price review, which is the meanest on record for the whole Community and is the worst ever for British producers.
The general feeling in agriculture is that in their treatment of the green pound the Government have found a way of permanently insulating British agriculture from Community farm price levels by maintaining the green pound at an artificially low level. There has been no adjustment of the value of the green pound since October 1975.
I hope that the Parliamentary Secretary, who is to reply, realises that the agricultural community feels that we must have a significant change in the value of the green pound soon. It is most important for the British farmer that a permanent method of adjusting the rates to take account of fluctuations in the value of European currencies should be worked out quickly.
The speeches of hon. Members on the Government Benches, including that of the right hon. Member for Battersea, North (Mr. Jay), involved nothing more than a knocking of the CAP with no


alternative policies being suggested. Hon. Members on the Government Benches seem to be wedded to the deficiency payments system, but they forget that before the CAP that system was breaking down, had reached a level that was unacceptable to the British taxpayer, and was being reinforced by standard quantities that were unacceptable to British farms. No Labour Members have told us what they would put in place of the CAP.

Mr. Spriggs: My right hon. Friend the Member for Battersea, North (Mr. Jay) is not here to answer the hon. Gentleman. I was here when my right hon. Friend spoke, and his important alternative was that Great Britain should find a way out of the CAP and have the right to trade with nations that produce food more cheaply.

Mr. Kimball: The right hon. Gentleman's alternative on sheepmeat would knock this country's sheep industry for six. He said that he would like to see New Zealand lamb coming in at the prices at which the New Zealanders can afford to produce it. That would put all our producers out of business.
The Community price review is very mean, especially in view of the massive cost increases that the industry has suffered, including, for example, £460 million on feeding stuffs. What farm has not been knocked for six by the cost of machinery repairs, fuel and servicing, and the exceptionally high cost to agriculture of overdrafts and loans?
There is a real problem among livestock producers. My hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) spoke about the problem in the pigmeat industry. It is facing a crisis. The industry is grateful for what the Government have been able to do, but it has not been enough. We must change the value of the green pound or we shall not solve this problem.
Beef producers need longer-term assurances about the continuation of the premium scheme as an option to the full intervention system.
I regret that we failed to get a sheepmeat regime negotiated in this price review. I understand that we nearly got such an agreement. It is the next most important area of livestock production. It is unfortunate that our colleagues in the

Community, particularly the Irish Free State, have been trying to get too much too quickly instead of going for an interim agreement on sheepmeat. I hope that the Under-Secretary will confirm the Government's intention to press on in an attempt to get an interim agreement on sheepmeat covering the next five years.

Mr. Nicholas Winterton: My hon. Friend mentioned Eire. Will he direct his attention to the undermining of the British beef market by beef cattle being dumped on our market by the Eire Government because of the huge differentials in the green pound?

Mr. Kimball: I agree with my hon. Friend, but I must not stray from the point that I was making.
There is a chance on 29th March to do something for the agricultural industry in the Budget. If people take a lower return in wages under the social contract the Chancellor of the Exchequer makes it easier for them to bear the burden by promising them, and eventually giving them, a small reduction in taxation.
The Parliamentary Secretary will agree that present price levels represent a severe cut-back in the prosperity of the agriculture industry. I hope that before his Budget the Chancellor will look at the proposals for reforming the tax structure of agriculture and providing more help, especially in relation to the problem of fluctuations in farm incomes. Farms often have a high income in one year, but the high tax assessment on those returns falls due the next year, when there may be a much lower yield.
I know that the Government recognise the problem. The Parliamentary Secretary has made some sympathetic noises about it. I hope that, in order to mitigate the very bad price review, further progress can be made in adjusting the taxation system to meet particular problems of the industry, especially the annual fluctuations in profitability. Some help has been given by way of the new capital transfer tax arrangements for business assets, but more must be done to help with the fluctuations in farm incomes.
What has come out of this debate very clearly, in speeches from both sides of the House, is the need to reshape the common agricultural policy. My right hon. Friend the Member for Yeovil (Mr. Peyton) said that we must be more


flexible in our approach to the CAP. It is sad that the references made in the last review in 1974, following the first 10 years of the working of the CAP, have not been followed up by the idea of reinforcing target prices with production grants. I am certain that this is an area in which we should look for substantial change in the CAP, and include some of the best parts of the old system. Such a move might help some of the less favoured areas. We should also carefully examine the situation to see whether we can work some production grants into the present system. I believe that such moves would be favourably received.
The present feeling is that we have a Minister of Food rather than a Minister of Agriculture. I was encouraged by the words of my right hon. Friend the Member for Yeovil, because the Opposition wish to see a Minister of Agriculture once again and not just a consumers' Minister.

7.52 p.m.

Miss Joan Maynard: I am sorry that my right hon. Friend the Minister of Agriculture has had to leave the Chamber, although I understand why he has had to do so. I congratulate him on his speech and warmly endorse his efforts in trying to restrain food price increases to a minimum.
I do not agree with the hon. Member for Gainsborough (Mr. Kimball) that my right hon. Friend is acting only as a Minister of Food. Labour Governments have an honourable record on the subject of agriculture. The hon. Gentleman also referred to the social contract. The three documents with which we are dealing in this debate tie in with the whole subject of prices and inflation, about which we are all concerned. It is true to say that farm workers have loyally supported that contract. As a result, they have made sacrifices and have accepted a cut in their standards of living. That is a considerable sacrifice, because farm workers are, to begin with, low-paid. Farmers should not expect only the workers to make sacrifices; other people must make them, too. Farmers may come to the view that they are not entitled to everything they want in terms of price increases.
I turn to the question of high prices and what has been said about their being

counter-productive—and I think it is agreed that they can be put in that category. High prices certainly do not help the industry, because if the industry meets sales resistance is will not be so successful or profitable, or able to invest as it should, and it will not have the confidence that we want it to have, because it is a great and important industry.
I believe that prices are being kept artificially high—[HON. MEMBERS: "No."] I thought that we were all agreed that there was a need to make progress in reducing the surpluses that are created by artificially high prices. However, I realise that some Opposition Members defend those surpluses on the ground that Governments must make provision for consumers in terms of certainty of supply, and obviously that is a responsibility faced by every Government. However, I suggest that this was much more sensibly achieved by deficiency payments and guaranteed prices. One often hears it said that our consumers are being held to ransom on potato prices, but it is true to say that consumers are being held to ransom in the prices that they must pay flowing from the common agricultural policy.
Let me turn to the subject of the milk surplus.

Mr. Michael Jopling: I am interested in the hon. Lady's argument. She extols the virtues of the earlier deficiency payments system and seeks to justify her comments by instancing the commodity of potatoes, but is it not true to say that there is no Community regime on potatoes and that the present system provides support for that commodity, based on the deficiency payments scheme and the guaranteed price arrangement, which the hon. Lady was extolling a few moments ago?

Miss Maynard: The system that operated kept potatoes out of the market, and that was why we were paying such a high price for them.
I was about to deal with the question of milk surpluses and surpluses in milk products, such as butter and cheese. The Commission, on its own figures, estimates that production is 10 per cent. too high. I am glad to see that our Government are


supporting the increased provision of subsidised school milk. That reminds me of the actions of a distinguished right hon. Lady who now leads the Opposition when, as Secretary of State for Education and Science, she took away free school milk. I am delighted that that situation is to be reversed.
I believe that the way to deal with surpluses is to expand efficient production—and certainly the majority of United Kingdom production falls into that category. I believe that we should contract inefficient production and production that is incapable of economic improvement. The EEC has attempted to ban aids to modernise and improve our dairy farms. I am glad that the Government have been able to resist that attempt, because that would have been the road to ruin. Prices are being kept artificially high, and result in mountains of food while millions in the world starve. There seems no sense in that arrangement.
Some of us never wanted to go into the Common Market. Our worst fears have been realised. There is now a great deal of discussion whether we should have direct elections in the EEC. I gather that we shall probably lose our marketing boards, because they are contrary to the provisions of the Treaty of Rome. I believe that we should more usefully spend our time in discussing how to get out of the Common Market rather than how people should be elected to any assembly within it. The Common Market has proved a disaster to the British people, and certainly to the farming community.
Who benefits from the present artificially high prices? It is the German farmers and the inefficient producers who are farming uneconomic units who gain the advantages of them. As the Minister said, we do not want to deal ruthlessly with the small producers, but that is a matter for national Governments and should not be solved by charging ridiculously high food prices throughout the Market. We were told in the negotiations that if we were in the EEC we would obtain cheaper food. What has happened is that prices in the Common Market have usually been above world prices. At present we can buy wheat, butter and cheese much more cheaply in the world market.
Let me refer to the butter scandal. We know that 260,000 tons of butter are in stock within the EEC and yet the British consumer has to pay 56p a pound for it. But that butter is being sold outside the EEC at 17p to 18p a pound. Many people have argued that if cheap butter is available it should be sold within the Market—but it cannot be sold within the Market because of the CAP system. Furthermore, because of the artificially high prices, patterns of consumption are changing. Less butter and meat and fewer eggs are being bought. These are important protein foods, and it is not good for the health of our people that they should be eating less of them. Price increases should be kept to a minimum.
I should welcome a freeze on basic food prices. They have inflated by 23½ per cent. in the past 12 months, at a time when we have had a policy of wage restraint. That gives some idea of the cut in living standards that workers have accepted and the sacrifice that they have made. The trouble is that we have EEC prices but not EEC wages.
The proposed price increases in the price review plus the final transition to EEC prices this year will, if they are accepted, put 70p a week on the average family's food bill. Food subsidies are to be slashed next year from the present £409 million to only £37 million. These cuts should be restored.
Price inflation is running at 21·8 per cent. a year. So much for the theory that wages were the real cause of our difficulties. The present situation follows nearly two years of wage restraint. We face the prospect of the price of tea increasing to 32p a quarter while Brooke Bond's shareholders have brewed record profits. The company's pre-tax profit has jumped by more than £6½ million, to £16,795,000 for the past six months. Beef prices have fallen for the producer but the consumer still pays the same high price. Is there any wonder that consumers are beginning to say that enough is enough? We must remember that the buck always stops at the consumer.
Our farm workers help to produce 50 per cent. of our food. They are among Britain's lowest-paid workers. The gap between the average earnings of industrial workers and farm workers is now running at nearly £20 a week. It is


because of the level of their wages that farm workers are not able to eat the prime beef that they produce.
There is much pressure from the Opposition Benches to devalue the green pound. I re-emphasise the point made by my right hon. Friend the Minister of Agriculture, Fisheries and Food that not all farmers would benefit from such devaluation. The price of animal feeding-stuffs would go up by much the same amount as the extra return on the goods produced. Many of our farmers would not benefit at all. If possible, the green pound should be used as a bargaining counter to obtain a fundamental reform of the common agricultural policy. Alternatively, as the TUC says, it should be used as a bargaining counter to achieve a fundamental reform of the way in which food prices are determined in the EEC.
I refer again to the agreement between the Government and the TUC on the social contract. We have seen the loyal support of all workers, including farm workers. I emphasise to the Government that they said that their side of the bargain would be to try to hold down prices. I am pleased that my right hon. Friend is trying to do that. It is an important side of the social contract. Some say that we should educate the housewife to accept that she will have to pay higher food prices. That is to ignore the fact that she has only a limited amount of cash.
I strongly support the Minister in his attempt to minimise the increase in food prices. Everyone needs food, and the political consequences of the present price rises and of failing to stop price rises going ahead at the present level will be serious. We need a fundamental change in the common agricultural policy. If we cannot get such a change, we need to scrap the policy.
I support those on both sides of the House who have been arguing for a debate and a decision by the House on the whole issue of the CAP. High food prices hit hardest the lowest-paid and the poorer sections of our community, because they spend a higher percentage of their income on food than do the higher-paid. As Socialists it is our job to protect, in particular, the underprivileged and the less well-off.

8.6 p.m.

Mr. Andrew Welsh: In this important debate, and certainly in the speech of the hon. Member for Sheffield, Brightside (Miss Maynard), great stress has rightly been laid on the needs of the consumer. I hope that in taking that approach we do not lose sight of the needs of the producer. I shall air some of the problems faced by agriculture and I hope that I can urge the Government to take some action.
Farmers have a great predilection to moan and girn. This seems to be some kind of an occupational hazard. In Scotland they are moaning and girning just now. I hope that the Minister of Agriculture, Fisheries and Food will have the wisdom to listen to what they are saying. I hope that he will listen to some of the arguments that are being made in his direction.
At present certain specialist groups of farmers do not have to look for their troubles. There is the problem of capital taxation in an industry that generates almost all its own capital internally. If there are not profits, the much-needed investment in new machinery and technology will not take place. I hope that the Minister will consider urgently the essential changes in this present punitive capital taxation faced by agriculture and positively fight for price levels in the EEC and the United Kingdom that take into account the special nature of the Scottish and United Kingdom agriculture industry.
I lend my voice to the plea for some sensible adjustment of the green pound. I realise the problems that face consumers when they have to pay the price for the continued failure of the United Kingdom economy and the accompanying and consequent devalued pound. However, it is definitely in the United Kingdom consumers' long-term interest to ensure and protect United Kingdom producers. Our farming industry is efficient. It is efficient enough to face and overcome its competitors. However, it can do so only if it is allowed to compete on a fair and equal basis. I urge the Minister positively to search for a better long-term deal than has so far been achieved in respect of green pound arrangements and the common agricultural policy.
I ask the Government to consider certain individual sectors of the agriculture industry and to take action to meet their problems. No one can be blind to the present difficulties facing the pig industry. I ask the Minister to look urgently at the problem and to take action over and above his present 50p per score subsidy. The current unjustifiably high mcas that are payable on imported bacon are another turn in the screw for the pig producer.
The plight of the industry is shown in the continuing high level of sow slaughterings, which are 66 per cent. above the level of one year ago. That is evidence enough that the Government subsidy is not fulfilling its stated intention. The reason is not hard to see. Even this year, for example, in the North-East of Scotland pig prices have shown a worrying drop.
The hon. Gentleman is not present at this moment, but I confirm the figures of the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith). Those figures show a worrying drop. For example, SMC A1 bacon pigs fetched £6·36 a score on 20th January 1977. By 10th March the price had fallen to £5·94 per score. In the same period the price of SMC A1 cutter pigs fell from £6·34 per score to £5·88. In other words, the 50p per score subsidy has been completed eroded and caught up on by falling prices. Indeed, I understand that many farmers are now worse off than before the subsidy was introduced. I hope that the Government will bear in mind the repercussions, in terms of unemployment, that this situation can have in a rural area unless it is halted.
With the massive increases in feed costs, it is obvious why the pig industry in particular is in trouble. For the period January to March, one estimate is of a rise of £4 per ton in feed costs, which has had to be absorbed by United Kingdom producers who face tough subsidised foreign competition. No wonder the Scottish pig farmers are angry about a common agricultural policy that allows them to face Danish imports with massive subsidies of £259 per ton for exports to the United Kingdom. In view of these figures, I suggest that the Minister should consider adding an additional 50p per score subsidy to the measure that he has

already taken. I hope that he will act urgently on suggestions for a recalculation of the mca formula in terms of feed prices.
That may not be communautaire in outlook, but I am sure that it would not stop the French Government, for example, if they felt that one of their basic and essential industries was in danger. If the Minister does not act, these problems will inevitably lead to a shortage of pig-meat in about seven to eight months, with all the attendant evils that that will bring for the consumer.
The working of the CAP and the continued fall in the value of the pound is making the United Kingdom literally a high-priced food dump for Europe—Danish bacon, Irish beef, butter, cheese, and so on. The results are there for all to see. That is the opposite of the Government's stated intention in their White Paper "Food from Our Own Resources". That is the reality of the situation. The Government must fight hard for our agriculture industry in the face of this kind of unfair competition.
I hope that the Minister will bear in mind the special problems of the Scottish sheep industry, which has recently undergone a hard winter with consequent extra expense on feeding stuffs. One estimate given to me is an extra £3 to £4 per feeding ewe. I ask the Minister to take that very much into account when deciding his target for an end product price. I believe that he has already made an announcement along these lines today, and that is to be welcomed.
Will the Minister also assure the Scottish sheep farmers that in his EEC negotiations he will seek continued access for their products to the French, particularly the Paris, market?
Is the Minister aware of the discrimination against Scottish sheep exports to France? The levy almost doubles the price of each lamb exported. The export levy appears to be a penalty against our exports. I hope that the Minister will raise this issue and gain some adjustment for the Scottish farmers involved.
Is the right hon. Gentleman aware of the importance to my constituency in particular and to Scotland as a whole of the soft fruit industry? I should like to mention a specific problem affecting


raspberry growers. In its agricultural thinking the Common Market has not fully taken on board the importance of this Scottish resource. For example, there is no adequate EEC monitoring or statistical service for an industry that has the dangerous threat of cheap Eastern European dumping hanging over it all the time. I ask the Government to give special thought to the specific needs and worries of the Scottish soft fruit industry within the context of the EEC.
On entering the Common Market, like it or not, we became part of a highly protectionist organisation, hence a high-price food system, and consequently we have high food prices. But we do not have the corollary of the promises made to us when we went in—the high wages that were supposed to meet the high and rising costs of foodstuffs. British housewives are suffering at the same time as the argriculture industry is being asked to compete, in some instances, on unfair terms. I hope that the message has got through to the Minister. I know that he has a difficult tightrope to walk. However, the CAP must be fundamentally reformed. As far as I am concerned, the sooner that happens, the better.

8.15 p.m.

Mr. William Hamilton: I think that the people of Scotland will note that the hon. Member for South Angus (Mr. Welsh) spent the greater part of his speech reading from an NFU brief. The hon. Gentleman made scarce reference to the consumer. I want to refer almost entirely to the interests of the consumer.

Mr. Welsh: rose—

Mr. Hamilton: I shall not give way. I have promised to make a short speech.
The existence of the common agricultural policy reflects the power of the farm lobby in Europe. The farming vote in Europe determined the nature and character of the CAP. As soon as we got in, the seeds of conflict were sown. We were the most highly urbanised country in the new Nine and we paid far more attention—politically, we had to do so—to the interests of the consumer than did the Europeans. Therefore, there was a direct conflict between a country, a Government and an agriculture industry primarily geared to safeguarding the

interests of the consumer while giving a fair deal to the farmer and interests prevailing on the Continent. That conflict was inevitable. In consequence, we shall see in Europe and in this country a year of consumer aggression.
I was and still am a pro-European. I believe that the long-term advantages of being in the enlarged Community far outweigh any temporary short-term disadvantages, of which this is one. However, there is a gut feeling among housewives in this country that they are being taken for a ride, especially in regard to food prices. Coffee and tea do not particularly come into this argument. The housewife feels helpless in the face of the gamble that is now going on in these commodities in the commodity markets. Of course, we get the rationalisation of the pundits on radio and television about droughts, floods, fires, or whatever it might be. But enormous profits are being made by middle men who are gambling on futures in these commodities.
That outrage was compounded and crystallised by the revelation that EEC surplus butter was being sold to the USSR at knock-down prices by a French Communist spiv who was exercising private enterprise initiatives, so lauded by the Conservative Party, which should be the last in the world to complain about this guy who was minding his own business, standing on his own feet, and flogging butter to the Soviet Union. Obviously the Russian agricultural system does not work, so Russia must look to the EEC capitalist organisation for its butter and to another capitalist organisation, America, for its grain.
Of course, there is no incentive for the Russians to have an efficient agriculture industry when they can get cheap butter from the EEC and cheap grain from the United States. No doubt the Soviet Union, with its capitalist instincts, will resell that cheap butter to Chile or to other countries. We can do nothing to stop the Soviet Union from doing that.
The sale of the butter to Russia was made no better by the knowledge that the deal was perfectly legal within the terms of the CAP. The EEC is an exporter of butter because the CAP is designed to produce what are described as structural surpluses. It produces more than is needed. To ensure that nobody can make


an extortionate demand, it keeps the price high. Therefore, it cannot sell all the butter in the domestic market. The CAP encapsulates the high price policy. We knew that when we went into the Market.
The reason, apart from the one that I gave earlier, is that the CAP is the only effective regional policy in Europe. We have had a regional policy of one kind or another in this country since the 1930s. But that is the only regional policy which the EEC has got. It has got to make sure that the poorer farmers in the poorer regions get prices for their commodities which are sufficiently high to enable them to have a living. But that by definition means that the richer farmers in the more prosperous areas are extremely rich and getting richer.
The figures produced by the Economic and Social Committee in Europe show that the gulf between the poorer farmers and the richer ones in Europe is getting greater rather than less. The regional policy, as expounded and encapsulated in the EEC, is failing. But we are getting the worst of both worlds. Not only are the poorer farmers not getting a good living—the policy was designed to protect them—but also the consumer is getting an extremely raw deal. To add insult to injury, these surpluses are not being channelled back to the consumers within the EEC but are being sold to third countries outside.
It is inevitable, indeed highly desirable, that an agricultural policy, be it a national or an international one, should produce surpluses. We all make a great virtue of saving, individually and collectively, as a nation. We strive to have an individual or family surplus ourselves. That is what an agricultural policy does. The more efficient it is in a good harvest year makes it inevitable that a surplus will be produced. That enables us to tide ourselves over in years when we have a drought such as last year and the year before.
I pay tribute to the Minister for making it clear that the CAP must take account of our national interests. We cannot simply accept what the EEC does without regard to the effects on our internal economy. The Government have accepted the need to adopt these two remaining transitional stages to EEC prices in the course of this year. That in itself

will make it extremely difficult to achieve a third phase of the social contract. If the Commission's proposals are adopted in addition to these two transitional stages towards EEC prices then I believe that a third phase of the social contract will be virtually impossible.
The European Commission and the Council of Ministers must understand that. My God, the NFU is the most powerful pressure group in the world. Peter Jay was right when he said something like that in The Times the other day. The farmers are doing very well. To put it mildly, they are not doing too badly. They are wanting to go much further than the Commission proposes. Our NFU wants higher prices, a devaluation of the green pound and all these other things. It knows very well that the future of this country depends on some kind of agreement with the workers for at least another 12 months. If we do not do that, then farms, and the rest of our industrial community will go bankrupt.
A lot of criticism has been made of the CAP. I in no way seek to dilute that criticism, because the CAP is subject to criticism. However, the alternative proposals have been pretty thin on the ground. I would call the Minister's attention to the report of the EEC Social Committee, dated 10th March 1977, which states:
The Committee considers that the Commission should call an ad hoc conference at Community level of the various interested socio-professional groups. Such a conference would certainly help to clarify the options and assist a decision-making process with respect to improvements being made to the CAP in order to strengthen the Community.
The report went on to detail a positive alternative to the present CAP. I hope the Minister will comment on that report because it was published in January 1977 and is very much up to date. That committee consists of authoritative people from all walks of life in the Community right across the political spectrum. It is worth getting some kind of response from the Minister about it.
It is no good condemning the policy and saying that for sound national reasons we are not going along with the Commission's proposals, without proposing alternatives. My hon. Friend may not have read the agricultural document produced by the Socialist Group in the European Parliament which emphasised the


need to redress the balance between producers and consumers. I hope my hon. Friend will take time to read that document because we went out of our way to say that of course the producer needs to have a fair return on his capital investment and labour but we emphasised that the consumer also has rights. Up to now the CAP has been oriented towards the needs of the producer and has completely ignored the interests of the consumer. That is reflected in the composition of the Commission. There is no Commissioner for consumer interests but there is a Commissioner for the agricultural lobby.
All these things need to be weighed carefully by the Government. I hope they will eventually produce a White Paper themselves setting out their view of an alternative agricultural policy rather than pursuing, as they seem to have done up to now, a fairly negative policy of opposing what the Commission has produced.

8.28 p.m.

Mr. John Farr: I am sorry that the hon. Member for Sheffield, Brightside (Miss Maynard) is no longer in the Chamber. It is a pity that her speech, which was so unsympathetic but so characteristic of her, contained so little mention of expanding United Kingdom agriculture. She did not seem to regard that as an important factor. It is therefore hardly surprising that a number of branches of the National Union of Agricultural and Allied Workers no longer wish to sponsor her membership of the House.
I declare an interest immediately, in that I farm in this country. I have two particular points to raise. The first concerns the gravity of the situation of beef production in those parts of the country that specialise in producing the finished beef animal. The situation is becoming increasingly worrying every day because of the Minister's apparent lack of concern about the problem that faces many producers, especially beef producers.
Recently the Minister visited my constituency. He had the courtesy to inform me in advance of his visit. He made a speech there. Although my constituents accorded him their usual traditionally friendly welcome, I assure the Parliamentary Secretary that what the Minister said did not satisfy my constituents by any

means. They are desperately worried about the insincerity of this Government towards beef producers.
The Government's insincerity is evidenced by the latest table of statistics, which shows that beef production is down and is declining. It is way off the target declared in "Food from Our Own Resources".
The lack of confidence on the part of producers is also aggravated by the very low prices that were experienced in 1974. They gave beef producers a nasty fright. They are careful to remember that lesson when they consider maintaining or expanding production.
The Government have not helped to create confidence amongst beef producers by their failure to take any action about the green pound. They certainly have not maintained confidence because of their proposals in relation to taxation. The loss of service houses has not made farming easier for livestock men. We have a problem that is with us no matter what Government are in power, namely, the steady drain of agricultural land to non-agricultural use.
What producers and beef fatteners in the East Midlands want is a definite commitment from the Government that the variable beef premium scheme will be retained from 31st July 1977, which is the date when it is due to be phased out. We are daily waiting to hear the plans that the Government have to maintain some form of security for the long-term beef producer after 31st July of this year.
Another worrying aspect for the beef producer is the number of heavy Irish beef animals entering Britain. This number has been increasing since the Irish changed the value of their green pound whilst we in Britain refused to take action. The differential has made it much more profitable for the Irish to export almost finished beef animals to finish in Britain. That, in turn, is lowering the price of finished animals to British producers.
Another worrying aspect of a more general nature is in relation to the common agricultural policy, in particular the butter mountain. My hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) said that we must


expect the CAP surpluses to continue. He gave an example of what happened with commodities if surpluses did not exist.
However, there are surpluses and surpluses. I do not believe that public opinion will tolerate the amassing or continuation of the maintainous type of butter surplus that has been built up under the CAP. A pool, reservoir or moderate surplus of one commodity or another is a very valuable and useful buffer stock for many reasons, but this has got out of hand for dairy products. It is completely and utterly out of balance, and that is indefensible. I urge the Government to take action to restore the situation to one in which it is possible for an unbiased politician to go to his constituency and defend a moderate or reasonable surplus, instead of a gigantic mountain.
To my constituents, the particularly offensive thing about the butter mountain is that the taxpayer is subsidising cheap butter exports for the benefit of Iron Curtain countries. This is wrong, annoying and irritating, and is something that my constituents will not tolerate. They feel that it is quite wrong for the EEC to attempt to tamper or interfere with the price of vegetable oil products to get out of the mess in which it finds itself, over dairy products. It is rather like our Government defying the Prices Commission and forcing the British Gas Corporation to raise the price of gas because other forms of energy are uneconomic and cannot compete.
It is intolerable that the vegetable oil manufacturers should be requested to put up their prices whether they want to or not. It is quite wrong that we should get proposals of this nature relating to ice cream and dairy products. We have had this statement from the EEC, saying that one of the Commission's proposals, apparently to be considered soon, is that ice cream and a tin of cream of tomato soup can no longer be called such unless they contain a certain element of full cream. When one starts to tamper with the normal usage of names of children's commodities, such as ice cream, one wonders how ridiculous the whole system can become. If this ridiculous proposal is allowed to go through, sooner or later we shall have a regulation emanating from

the EEC saying that the Milky Way can no longer be called such because there is not a proper element of dairy fat therein.
The whole thing is entirely wrong and indefensible, because the cost of dairy support in one year amounted to no less than £1,140 million of taxpayers' money. The enormity of that figure is such that I could never defend it. I do not consider that I have heard the answer to that problem suggested in the debate today. There are many answers to the problem, and everyone has different ideas, ranging from those of my hon. Friend the Member for Banbury (Mr. Marten), who continually offers the advice that we should scrap the whole thing and has much support on both sides of the House, to more sophisticated solutions. The fact is that the problem must be solved because the people of this country will not tolerate mountains of butter products. The sooner we recognise this the better.
I do not agree with my hon. Friend the Member for Devon, West (Mr. Mills), who said that it would be adequate simply to freeze the price to the producer of certain dairy products, or marginally to reduce the price return. I do not think that that would be an adequate or meaningful way of getting to grips with the problem. Last year the whole of Europe, not just this country, had a very dry summer. The whole of Europe, not just this country, had dairy production below normal. If we have a normal summer this year, as is likely, dairy production will probably increase, unless really overriding steps are taken.

Mr. Peter Mills: I think that I ought to clarify the position. I said that there should be a reduction in the intervention price for skimmed milk powder. There should be a substantial drop in it. It would have a real effect on those who are simply producing milk for intervention.

Mr. Fan: My hon. Friend is referring to a scheme that may have a marked effect, although I do not think that it goes far enough. Other suggestions have been put to us to temporise this steady increase in the production of dairy produce within the Community. For example, there is the suggestion of a non-marketing and conversion scheme. This would give the Community power to persuade farmers between the ages of 55 and 63, who have


fewer than seven cows, not to sell their milk. We have the extended school milk programme. We have the extension of consumer subsidies for butter products which may also help to increase consumption. We have, in addition, the co-responsibility levy of 2½ per cent., possibly, from 16th September for all Community producers except those in mountain areas, and the Commission has proposed a standstill for the whole dairy sector until 16th September.
I regard all these as fringe measures. They do not get to grips with the mammoth problem that, sooner or later, unless action is taken, will bring down the common agricultural policy in ruins. If we wants to save the CAP during his period of chairmanship of the Council of Ministers I believe that the Minister, whatever his convictions—I do not regard him as a friend to the farmers, but he is a forthright man—can do the biggest service of all to the Community by suggesting far more forthright and energetic measures than anything that we have heard so far.
The sort of thing that the House should be considering, and that the Government should be introducing in their consultations in Europe, is cutting out the smaller producer in the Community. I know that it is easy to say that. One need only look at the statistics to see how difficult it would be, but the smaller producer has to go. I am not necessarily one who says that everything that is bigger is more efficient and more beautiful. I do not think that any of us would say that, in the light of the dreadful state of British Leyland, which was forced into its present gigantic mess by a former Secretary of State for Industry. But I am saying that it is nonsense that nearly 20 per cent. of the dairy cows in Europe and over 40 per cent. of the herds consist of herds numbering under five cows. These people must be persuaded to get out of the business so that more efficient producers can get on with the job and produce milk and dairy products more efficiently on a bigger scale and more cheaply for the benefit of the consumers.
Such attempts have been made in the Nine, but they have been marked by a studied failure in all the different schemes produced to encourage the smaller herd owner to give up. They have had one

common characteristic—a marked lack of success and lack of response. That can be seen by studying the figures, which show that the factors that make for efficiency in dairy production have changed little in the past few years in the EEC.
The tables show, for instance, that 11 per cent. of total dairy production in the EEC comes from Italy, but that the average herd size in Italy is only five cows. The Republic of Ireland produces 5 per cent. of total EEC dairy production and has an average herd size of just under 10 cows. No less than 22 per cent. of EEC dairy production comes from the Federal German Republic, where the average herd size is only nine. Yet in the United Kingdom we produce about 12 per cent. of total EEC daily production with an average herd size of 41 cows.
The carrot has been there long enough. Much more vigorous policies and actions are needed to cut out all the producers in the Community with a herd size of one to four cows. These small herds account for 40 per cent. of all herds and nearly 10 per cent. of all cows. If we could get a scheme of this nature started in the Community we would see a transformation in the size of the butter mountain. It would decline to more reasonable proportions and would be regarded as no more than a reasonable buffer stock.
How could we bring this about? I have suggested that a certain amount of compulsion should be used, but this is a very difficult situation because normally one leaves these things to the play of market forces. Normally one assumes that if a producer is operating on a bigger scale he is operating more efficiently, and, therefore, his neighbouring competitors will gradually fade out of business because of normal market forces.
This has not happened with the tenacious dairy producers. They have had the book thrown at them. All the discouraging legislation that we could throw at them has been thrown in the EEC and enacted in their own countries, yet dairymen with herds of one to four cows own nearly half of all the herds in the nine EEC countries.
We cannot rely on normal market forces to bring about a solution. We cannot rely on the natural disadvantages of producing from only four to five cows


compared with, say, 30 cows to freeze out the small man. More positive steps must be taken. One does not like to legislate or even to recommend legislation of this nature when a tiny herd may possibly not mean much in terms of financial reward but is still a great interest to a family or a widow. We must bear all these factors in mind.
Nevertheless, the time has come for the Minister, when he next meets his colleagues as President of the Council of Ministers, to consider whether we should be advocating a scheme under which the more milk that a producer produces the higher will be the rate per gallon that he receives. It could, perhaps be based on a monthly gallonage, so that anyone producing, for example, 1,000 or 2,000 gallons per month would receive the basic rate but if the gallonage exceeded the basic monthly quota, by every amount that it exceeded the quota the monthly return would be increased.
By advocating a scheme such as that we would be doing more than just waiting for long-term market factors to take effect. We would be doing more to get rid of the butter mountain than just sitting back and waiting for people to die or retire. We should be proposing something that does not just rely on market forces helping the bigger and more efficient producers.
If we took action on these lines we would be able to elbow out the smaller man from the industry with dignity and speed, and we would bring back some common sense and some public acceptance of what is at the moment an indefensible blot on the whole agriculture industry of Europe.

8.50 p.m.

Mr. Mark Hughes: I must start by expressing absolute amazement at the logic of the proposals advanced by the hon. Member for Harborough (Mr. Farr). If he believes that it is possible to elbow out Italian and French peasants he should realise that the politicians who proposed that would get something more than elbowing. One of the figures he did not produce shows that between 1969 and 1974 the Italian milk cow herd dropped by over 20 per cent.
If he is suggesting that there is too much milk, he might accept that it would

probably be politically easier to wipe out the very large producers who are small in number and highly efficient. The economic logic of his argument disturbs me. He suggests that those producing more than 1,000 gallons monthly would get a higher price per gallon. He goes on to suggest that this will reduce the surplus, but by definition the big farmers who would gain have the capacity to expand. They can get bank loans more readily.
One of the difficulties that has faced the use of price policy in the dairy sector is that if the price is decreased, frequently the supply of milk temporarily rises. This is because awkward peasants, those who do not put a cost on their labour, simply milk an extra cow and hope to make up the difference by a little extra work on their own part. The vast bulk of the milk in the Community.—believe the figure is more than 80 per cent.—is produced in four months off grass by the small people. So the cost of feedstuff does not affect them much. Therefore a fall in the price would not necessarily lead to a fall in the supply. In the short term the opposite could be the case.
I turn now to the problem of the butter surplus. It would be ungracious to remind the House of the response of certain Irish and other colleagues in Europe who say that we could get rid of a lot of the surplus by ceasing to import New Zealand produce. That to them would be a perfectly reasonable solution, and it could be secured without having to elbow the small producers in the Community out of the way.
On present per capita consumption it appears that there will be a butter surplus of about 500,000 to 600,000 tonnes in the Community by the end of this year. The cows have either already been to the bull or have started lactation. What, therefore, is the best way of getting rid of the butter surplus? Probably the cheapest answer is to burn it, because that costs the taxpayer nothing. The taxpayer has paid for the intervention and he does not have any ongoing costs of storing it or of paying the Russians to buy it. Burning it would be the cheapest thing for the taxpayer to do.
The most expensive thing to do would be to sell it as subsidised butter to internal consumers. That is the tragedy of surpluses of a structural and permanent


nature. If one destroys the surplus, that is cheap but politically unacceptable. If one tries to do the politically acceptable and sell it at subsidised rates within the Community, that becomes expensive—at least twice as expensive as dealing with the matter the other way.
There is, therefore, a risk. If one introduces internal consumer subsidies, larger sums will have to be paid by the taxpayers. The need to eradicate the sources of the surpluses is becoming stronger. I doubt whether the co-responsibility levy, the non-marketing premium and the other current proposals will achieve much to reduce the present milk surplus. It is not a problem of too many cows—in that respect I agree with the hon. Member for Harborough—but it is a problem of too many people who rely over heavily on cows for their incomes, as the current milk cheque syndrome shows.
We shall not eradicate the milk surplus unless we find a way of replacing that income immediately and directly for the many people who have no means of changing their form of husbandry into something that is equally profitable per man-hour or per acre. Perhaps direct economic support for small farmers in the disadvantaged regions of the Community is the best social and economic method of eradicating the structural surpluses. Even if that were to succeed—and one has tried to discuss it in other bodies such as the European Parliament—what the price review shows quite clearly is that the CAP, whatever validity it had in a period of relatively fixed exchange rates, would simply fall apart at the seams, with or without mcas.
That may sound a little technical but the unit of account for agriculture is used arbitrarily as are all units of account. The agriculture unit of account happens to involve the snake countries. There is another unit of account called the European unit of account and it is based on current exchange rates. If one recalculates the present price proposals and instead of using the present type of unit of account one uses another unit of account the political problem is reversed. One forces the Germans to decrease their prices by 25 per cent. That is an entertaining proposal. However, the corollary is that by the arbitrary choice of that

particular base unit one forces upon the weaker currency nations a reinforcement of inflation by the very mechanism of the unit of account basis, and to that extent those who are subject to inflation pressures have them stoked up ever more, and ever more.
What has become quite clear over recent weeks is that any agricultural price packet coming from the Commission—leaving out adjustments of mcas—that was remotely acceptable to hon. Members on either side of the House would be wholly unacceptable to, say, Belgium or Luxembourg, whose voters would again be faced with a sharp fall in their real incomes, which is not acceptable to them.
We in this House must accept that mcas have now become a potential tool for fixing prices within the snake countries and that perhaps one of the methods of coping with the difficulties of the Benelux countries is to give them a sort of artificial mca—we should have to call it something else temporarily; perhaps a "temporary currency unit"—to get them over their problems. However, this is the sort of area in which the concept of a single market price has disappeared. It is just through the figment of our imagination that we are creating it. In reality it has disappeared from the Community.
Finally, I should like to refer to one or two areas that have been touched on by other speakers. Quite clearly, the Commission's attempt to put isoglucose exclusively within the sugar sector is misguided, because there is a general review of starch products and starch product manufacturing within the Community. There is an element that tries to refer to differentiating between maize imports and the balance of payments problems to the Community that they involve and that says, therefore, that one should attack isoglucose on that basis.
There is no objection to making importers pay import levies and so on. However, what is quite unacceptable is that, rather like King Canute faced with a new tide of technology coming in, we say "Stop". In the Commission's documents on the agricultural situation it praises efforts at increasing sugar production, to the point at which a surplus is expected—at about 3 million tonnes this year with a decent harvest. Then what does it do? Certain little voices are heard saying "We


fixed it too high for the Lomé countries. We should stop this kind of sugar coming in". Those little voices creep out from the woodwork, faced with a surplus, and say "There is this other dreadful stuff that costs a lot less for the manufacturers. We must stop them making it at a competitive price."
It is discouraging to any farmer or business man in the Community to make a capital investment, as people have done, for isoglucose manufacturing, in perfectly good faith, and then to have that investment totally destroyed as a commercial venture by desire and pressure from other forces. Therefore, I hope that my right hon. Friend will continue to press very hard for the retention of the right to manufacture isoglucose at a competitive price and that its manufacture should not be totally destroyed by this arbitrary whim of the Commission.
The other matter is the much more difficult area of the exclusive use proposals. Clearly, consumer protection has a proper place in this. It is difficult to object to asking that an edible substance called "cream" should have some dairy content. The joke that Bristol Cream Sherry should have a dairy content is going a little far. There seems to he a genuine case that labelling should be accurate and we should be reluctant to deny that. The use of labelling as a backdoor method of trying to alter consumption patterns and to get rid of mountains is unacceptable. One has differing advice, but it is more than possible that the reverse would be the case.
The proposal first saw the light of day in March or April 1974. I hope that the present Government will continue to oppose its crude application and seek a better method of labelling dairy products that does not mix up correct labelling, which we would welcome, with incorrect labelling as an excuse for putting on pressure to reduce the mountains.

9.6 p.m.

Mr. Richard Body: Not for the first time, I find myself in total agreement with the hon. Member for Durham (Mr. Hughes). He poured his share of derision on the butter mountain. Of course that mountain is absurd, but I doubt whether very much

harm will be done to anyone as a result of it. It will cost something, and there may be a marginal loss to New Zealand producers. What will happen to the world's sugar producers is far more serious. I am grateful that the Minister is now present. I know that he needs no persuading about this point.
Only a short time ago the Community decided to increase sugar prices substantially, with the result that the Community's acreage was expanded by about 16 per cent. and certain countries embarked upon sugar production which had no business to do so. I have in my constituency one of the most modern sugar beet factories in the world. Therefore I am the last one to advocate contraction of our own sugar beet industry. However, I hope that any expansion will be based in East Anglia where we can grow efficiently and effectively.
That cannot be said of parts of Ireland, Italy and, to some extent, Denmark, where there has been a massive expansion of sugar beet production in the last two years. There has been a 37 per cent. increase in production in Italy. The increase in price has inevitably met consumer resistance and there has been no substantial increase in consumption in the Community in the last year or so. Indeed, it is almost static. Yet we shall have a large increase in tonnage.
The Community calculates that there will be a surplus this year of 2·9 million tonnes. I remind the Minister of what happened before. An outlet must be found somewhere, and sugar is one of the easiest commodities to store in intervention. The last time the Community resorted to dumping sugar was, I think, in 1968. On that occasion it dumped 1 million tonnes, about one-third of what it may well dump in the world in the next 12 months or so.
Some of my hon. Friends, including my hon. Friends the Members for Banbury (Mr. Marten) and Harborough (Mr. Farr), and I visited sugar growing countries shortly afterwards. It is not possible to describe the destitution that we witnessed. Those plantations could produce sugar efficiently and, despite what my hon. Friend the Member for Derbyshire, West (Mr. Scott-Hopkins) may say, at a cheaper price than we do in this country when one eliminates the subsidy available to our growers.
When the Community dumped that 1 million tonnes, it was on a very sensitive market. The world market is only 12 per cent. of the total, because all the other sugar has always been bought and sold among countries, either through the then Commonwealth Sugar Agreement or through the International Sugar Agreement. Thus, only a very small amount was needed totally to dislocate the world's sugar market. The Community's action in 1968 caused the world price of sugar to fall to below £20 a tonne and for some weeks it was as low as £12·50—less than half the cost of producing it in the most efficient countries, like Mauritius and Fiji.
That free market is enormously important to the Third World. Of course most of their returns come from the sugar agreement, but if they want more than the barest income—anything at all for any improvement of their plantations—that must come from their returns on the free world market.
It was a long time before those sugar plantations and the many thousands of people who depend on them for their livelihood—and a very meagre livelihood at that—recovered from the EEC's onslaught. It was as vicious and selfish an act as one could imagine when the EEC dumped that 1 million tonnes. Now, there is a risk of three times as much sugar being dumped. According to the report which I know the Minister will have studied carefully, there is no sign that the EEC will come to terms with the potentially serious consequences of that large surplus.
The Minister has so far been very successful in teaching his colleagues on the Council. I hope that he will give them a little more tuition about how we are managing matters in this country. I cannot believe that the quota system is working satisfactorily on the Continent. It cannot be right to expand the Italian quotas by 37 per cent. We could not dream of doing that in this country. If we were to expand production here, we could do so much more effectively than Italy, Denmark or Ireland, the three countries which have been the main beneficiaries of the sugar expansion.

Mr. Farr: My hon. Friend will recall that, in the period of which he speaks, when there was a surplus production of

sugar in the world, the EEC refused to sign the International Sugar Agreement which was hammered out. Does he know whether the EEC has a more outward-looking attitude now, whether it has changed its mind and is now a signatory of the agreement, which would surely lead to a more orderly marketing of sugar supplies?

Mr. Body: That shows how selfish the Community has been over sugar. My hon. Friend is right to remind me that the Community refused to sign the agreement, which would have made some amends for the appalling harm that it did to many thousands of desperately poor people whose livelihood depends on the sugar plantations. My hon. Friend is right to say, albeit rhetorically, that there is no sign now that the Community is alive to the terrible consequences of dumping this 3 million tonnes.

Mr. Spearing: Would the hon. Gentleman not go further? This is the very time when the Third World countries are seeking a new economic order through a common fund to maintain the stability of this product. If the same thing happens, on a larger scale than in 1968, would not have have severe repercussions for the whole developing world and be ample evidence of the essentially evil nature of the CAP?

Mr. Body: I agree entirely. Reading the report, one realises that the Community has no conscience about this and does not understand the measure of the evil that was done when it dumped a large quantity of sugar on the world market. I emphasise to the Minister that I hope that he will do something more to persuade the EEC to review its policies for giving quotas and that there should be a system there that is more similar to that which we have. Only those areas of the Community that can produce sugar efficiently should be allowed to do so.
On the many occasions that I have spoken about pigs I have had to declare an interest. I do not do so now because I got out of that market on 1st January 1976 when prices were high. My neighbour asked me why I was doing that and said that I should stay in because prices were good, but I thought it was


wholly predictable that the pig market would go sour in 1976 and still sourer in 1977 I took great pleasure in saying that the Common Market would be to blame for it.
I am glad to say that I publicly gave detailed reasons why I proposed to go out of pig production at the beginning of 1976. I want to touch on this point because I wholeheartedly applaud what the Minister has done. He has been rather unjustly censured by some of those who advocate that more should be done now.
It was predictable that the price of feeding stuffs would considerably increase. For years, those of us who produced pigs have been able to pay less than £30 a ton for feeding stuffs. I paid £27. One paid that price for years and never imagined that it would go up. As the Minister knows, the price of feeding stuffs is of obvious importance to the producer because it represents 80 per cent. of his costs. Now the price has gone way over £100 a ton. There has been about a four-fold increase in a short time. I must say to my hon. Friends who become so euphoric about the Market that we have had to pay this appalling four-fold increase in the price of feeding stuffs and that the increases will continue.
My other reason for getting out of pig producing was that it was equally predictable that there would be a Community cycle. We have always dealt with our home cycle. We found that every four or five years prices were too high and then went too far down. Those of us who were specialists in pig production knew that cycle and survived it. Now we have a Community cycle and it is a different creature.
The Community decided to expand pig production and we have had a 3 per cent. increase. That may seem small, but it has bedevilled the pig market throughout the Community. There is now a surplus and the total herd is about 72 million pigs, yet demand has not risen to meet the increase. Indeed, the demand has stayed still. I am speaking now of the demand throughout the whole Community—I stand to be corrected, but I believe I am right in saying this—and the increase in the price of pigs has met with consumer resistance with the result

that consumption has not increased. Therefore we have a surplus of pigs in the Community, and this is the essential reason why prices are unsatisfactory and will remain so for the whole of 1977. It is because the Community has increased the pig herd, and that position will continue throughout the whole of this year. It will not be until some time in 1978—probably towards the end of the year—that we shall get the market back into some kind of balance.
Farmers may just be able to hold on to their herds because of the unilateral and arbitrary action of the Minister which was manifestly contrary to the Common Market's policies. I am glad that he took that action and I hope that he will stand firm and will not suffer too much at the European Court of Justice when he stands in the dock there.
My hon. Friend the Member for Banbury (Mr. Marten) has said on a number of occasions that we should scrap the CAP. I agree with him. I think that the hon. Member for Fife, Central (Mr. Hamilton) was over-optimistic in talking about a year of consumer aggression. It will not be one year but several years, and this will cause friction between consumers, particularly in this country, and farmers. Representing, as I do, more farmers than any other hon. Member, I should regret such a development. I passionately believe that the long-term interests of the consumer are the long-term interests of farmers, but this will not be apparent for the next few years and there will be a clash of interests between consumer and farmer.
This clash will involve dangers for the farmer. It is disagreeable for those of us in farming to have to admit that about one-quarter of our gross income comes from the taxpayer's pocket. We usually keep fairly quiet about it, but that sort of largesse is dependent upon the good will of the British people. If that is lost, we cannot expect the sort of support that we have had and that we must have if we are to remain a prosperous branch of our national industry.
Another consequence of years of consumer aggression will be that we shall never see any sensible European union. It is almost 20 years to the day since the Treaty of Rome was signed and in all that time the only common policy that we have worked out is the CAP. I was


a Member of this House at that time, and I urged that we should be represented at those proceedings and should play a part in the formation of the Community.
I regret enormously that in all those years we have been able to establish only something which will be a thorough irritant to the British people until it is fundamentally and drastically reformed. I do not think that it ever will be reformed because there will always be powerful interests, especially in France, Holland and Ireland, that will oppose any fundamental change.
We shall never progress beyond the CAP towards other steps of international co-operation in Western Europe that are so essential for our peace and security. Not until we scrap the CAP shall we be able to work towards a sensible European unity.

9.25 p.m.

Mr. John Lee: The hon. Member for Holland with Boston (Mr. Body) is one of my oldest friends in the House. We do not often find ourselves in agreement on political matters but we never find ourselves in disagreement in discussing the Common Market and the idiocies of the common agricultural policy.
It was a breath of fresh air to listen to the speech of my right hon. Friend the Minister of Agriculture. We had long gloomy periods, with foot-and-mouth Fred coming back from Brussels proclaiming defeats as though they were victories, delivering long pages of gobbledegook as though he did not understand them, which was understandable because they were almost totally incomprehensible. At last we have a Minister of Agriculture who is on top of his job and prepared to have a row with this organisation, as he has on several occasions—and he may well have many more.
I share with the hon. Member for Holland with Boston concern for the underdeveloped world. I have always taken a strong interest in that subject. What is objectionable about the Common Market is not just the idiocies of its complex agricultural policy, but the sheer immorality of it and the way in which it has knocked the guts out of the economies—and threatens to do the same thing again—of many poor and economically

suspect countries such as Fiji, Mauritius and Barbados. Such behaviour makes one incensed, but all the more glad when one sees the obvious discomfiture of the latest absurdity in the Community over isoglucose. That is an embarrassment that will be exploited.
I do not think there is the slightest chance that these policies will be reformed. The hon. Member for Harborough (Mr. Farr) is a respected farmer, and he produced some interesting suggestions for ameliorating the situation, but at the end of the day I believe that his proposals would have the opposite effect to that which he intends. They would increase the surpluses instead of reducing them.
We welcome the situation in which the Minister finds himself in conflict in the courts. We face an unbridgeable and irreconcilable situation on at least four matters. The first is the stand taken by the Minister, which I endorse, in his refusal to devalue the green pound. That will produce more and more anger from the other members of the Community, particularly M. Lardinois. Secondly, there is the butter policy, which my right hon. Friend said is totally unacceptable. I do not think we shall do other than react violently to that situation. Then there is the isoglucose issue.
Finally, there is the problem of mcas, which was said to be temporary. They were introduced in 1969 when there was a wide divergence in values in the currencies in the system and when the Germans revalued and the French devalued. That was intended to be a temporary palliative to tide over a situation which was expected to correct itself but shows no signs of doing so.
I should like to know whether the lawyers in the Common Market—I do not know whether my right hon. Friend will be able to answer this question, but he is a lawyer—have worked out the implications if he is found to be in default in the courts, and what kind of retaliatory action or sanctions are expected to be forthcoming. I hope that we shall snap our fingers at the courts in the Community, because that will be the beginning of the destruction of the Community. or the beginning of our declaration of UD1 from the Common Market. That will be an opportunity that many of us who not


only dislike the agricultural policy but everything else in the Community will welcome.
The hon. Member for North Angus and Mearns (Mr. Buchanan-Smith), in a somewhat disingenuous speech, proclaimed his faith in Europe. I respect his sincerity, but he referred not only to agricultural matters but to the subject of defence. Anybody who takes that kind of view on defence and economic matters would never have acquiesced in the selling off of butter, at cat's meat prices, to the Russians and East Europeans.
That must be contrasted with the attitude of Senator Henry Jackson—Scoop Jackson—who wanted to link sales of cereals to Russia with an amelioration of Russia's internal policy. There is an argument for that. Sometimes these methods of trying to intervene in the internal affairs of another country can be counter-productive, but one can see the purpose behind them. At least it could be said that there was a policy synonymous with the idea of a separate and distinguishable Western attitude.
In any event, we have seen a Communist millionaire selling off butter to the Russians. I should like to know how much the Commission was privy to the proposed sale. I should like to know whether—as I believe and have been told—there was a belated last-minute attempt to intervene only after my right hon. Friend had been in touch with the Chairman of the Commission.
Some of us suspect that the Commission knew or suspected what was going on for quite a while. It was only because my right hon. Friend took the initiative that the matter was blown wide open. I suppose that there is a reasonable expectation—I am anxious to know from my right hon. Friend whether this is true—that we shall not have a repetition of such an absurdity. If there were a repetition there would be a row on the Labour Benches. Surely that would be the position on the Opposition Benches, for ideological reasons.
My right hon. Friend the Member for Battersea, North (Mr. Jay) almost drenched us in statistics in comparing world prices with Community prices. My right hon. Friend was demonstrating the advantageous position now held by world

prices, especially in dairy products and cereals, and comparing them with Common Market prices.
My right hon. Friend was good enough to inform me recently that we have spent £121 million on agricultural levies on imports from outside the Common Market, of which about £68 million has been spent on milk and milk products while nearly £18 million has been spent on cereals and £10 million on pigmeat. That was the situation existing under the undevalued pound. At least it was partly undevalued in October 1975. Since then there has been greater resistance, although devaluation has been sought. I put those figures on record as an illustration to those who try to gloss over the fact that we are obliged to be penalised every time we seek to import from sources cheaper than the Common Market.
I said at the outset of my remarks that isoglucose was one of the sticking points. I suppose it is one of the matters that might lead to a confrontation. Whether the Commission is beginning to be a little embarrassed about the matter I know not. I suppose that most hon. Members have read the letter from Lord Douglas of Barloch that appeared in yesterday's edition of The Times. The noble Lord wrote:
A factory for the production of fructose is due to start in London very soon. It has cost some £8 million. The market price of its product calculated on an equivalent basis will be £206 a ton as against £215 for beet sugar. The penalty proposed on it is £56 a ton. This prohibitive tax is virtually a confiscation of the expenditure on the erection and equipment of the factory.
Lord Barloch compared it with Luddite activity. Is there anyone in the House who would deny that? Would anyone really say that there was any conceivable justification for such action? Could such a claim be made by even the most fervent Marketeer? I suppose that some of them are dotty enough to do so, but nearly everyone else would regard it as utterly indefensible.
We are discussing a jumble of documents, which we are supposed to have digested before the debate. As always on these occasions the Ministry has kindly provided a precis and put in an explanatory memorandum, which is just as well since most of the documents are too large to be manageable.
I notice that Document R/2469/76 refers, in relation to the proposal that we are resisting for devaluation of the green pounds to the Commission taking over powers from the Council of Ministers. I think that my right hon. Friend knows the passage to which I am referring. If that is so, that is a further retrograde step. At least the Ministers in the Council of Ministers are answerable to the respective Parliaments of the component nations of the Community, and some pressure can be brought upon them. But the Commission, as that redoubtable anti-Marketeer on the Right wing of the Labour Party, William Pickles, described it, is the most complete and—in the strict sense—bureaucratic organisation that the world has produced in modern times, and is responsible to no one. I should like to know how far that proposal has gone. I do not expect my right hon. Friend to intervene now, but when he replies I hope that he will deal with that matter.
I end on one point that, in a sense, is not the Minister's direct responsibility but is for the Government as a whole. I express the regret—belatedly, and probably to no purpose—that consumer subsidies are to be phased out. They may not have made a great impact. To some extent their impact is psychological. At any rate, at a time when inflation may be gathering pace again and is certainly not diminishing to the single figures that we would wish, it does not seem right to phase them out.
I think that we are all agreed, including the right hon. Member for Yeovil (Mr. Peyton) somewhat tentatively and in an embarrased manner, that it is wrong to devalue the green pound and to concede other demands made by the Commission which would result in a further fuelling of inflation. Therefore, it is surely wrong to take away that admittedly minor ameliorative measure, which was introduced in 1974. I do not have much confidence that my pleas will be harkened to, but it is my wish that the Government, even at this late stage, will think again about that matter.

9.38 p.m.

Mr. Jerry Wiggin: A feature of the debate has certainly been that some hon. Gentlemen who do not normally participate in farming debates

have taken part in this one, perhaps through their own interests in food. I am sure that is a good thing and is to be welcomed.
The hon. Member for Birmingham, Handsworth (Mr. Lee) has not been a great debater on agricultural matters. When my great-grandfather represented the then Handsworth division of Staffordshire at least some part was agricultural and that would have been more appropriate.
I shall not follow the hon. Gentleman in most of what he said, because I do not agree with him. Moreover, his opening remarks about the previous Minister of Agriculture were both accurate and concisely put. I reserve my judgment about the present Minister of Agriculture a little longer, but I congratulate him on the clarity of his presentation to date which I am sure hon. Members on both sides of the House greatly appreciate. These matters are extremely complex, and winding them all up in a ball of cotton wool does not make it easier to understand the issues or to argue the case.
There has not been as much talk today as I should have liked about the obvious unfairness of failing to recoup the extra costs that the farming community has had to bear during the past 12 months. There is absolutely nothing new about not giving agriculture back its true costs. This was a constant and recurring feature of the old deficiency payment scheme, under which an arbitrary sum was deducted from the calculation on the ground that the industry had become more efficient. I hope the Parliamentary Secretary will tell me if there is any other industry which, even under the strict Price Commission rules, is not at least allowed to recover its costs. So far as I know there is no other. It is assumed that agriculture, because it is inherently very efficient, can carry the substantial burden, running into at least £100 million a year, on its back through its own efficiency.
It is said by some, I think by the Consumers Association, that at a time when we are fighting inflation the farmers have a social responsibility to make their contribution. Farmers have made their contribution, in terms of social responsibility and increased and efficient production, for many years. To use this


particular argument at this time is like saying to any section of industry "You must not have all your costs back". So far as I know, that is not a feature of the present arrangements for the curtailment of inflation.
When the right hon. Gentleman was discussing the problems over the green pound during his opening remarks I had considerable sympathy with what he said, but he omitted to point out that the real difficulties with the green pound have resulted from the disastrous drop in the value of the £ sterling. That was due to the Government's mismanagement of our economic affairs. There can be no argument about that. The value of the pound is the value which the world puts upon the currency of this nation, and that is the responsibility of the Government. If the right hon. Gentleman would persuade his colleagues to do some of the things that are so necessary, to a substantial extent, our economic and green pound problems could be solved almost overnight.
A great deal is said about the difficulties of curtailing production. I heartily endorse the remarks of those hon. Members who have said that the natural reaction of the farmer whose prices are cut is to increase production, which immediately exacerbates the problem. It was exactly that problem which was the weakness of the old deficiency payments scheme. As over-production got worse, the Government said, "We shall cut prices" and immediately everyone reacted by increasing production yet further. There is nothing new about that. But it is absolutely true that it happened.
We must have a complete rethink about expansion in agriculture. We talk and think about expansion as expansion only in production. We have to start thinking about expansion in profit. Farmers have to be allowed to see at least as much profit, or perhaps more profit, from a controlled level of production, rather than seeking all the time to cover extra expenses by producing more unwanted goods. I believe this could be done through the strict discipline of marketing boards, which must be monopoly first-time buyers.
Our own Milk Marketing Board is a good example of how this can work to

the positive advantage not only of the producer but also of the consumer and, as the Minister mentioned, the distribution system, the retailer, and so on. There seems to be great unanimity on both sides of the House with regard to retaining the Milk Marketing Board. I would suggest the system used by the British Sugar Corporation—another monopoly first-time buyer—in calculating, under Community rules, a quota system that allows a given quantity—an A quota—to be paid at a fairly high guaranteed price, which gives the farmer a knowledge and certainty of profitable production at a certain level. The grower can then grow more acreage at B quota prices, which may, in a year of shortage, exceed the A quota, but in a year of surplus may be totally unsaleable. That brings home to the individual producer the responsibility of adjusting his production to the market.
That is the problem the solution to which every country and every Government has been seeking for many years—to try to co-ordinate production with demand, given the immense variables of the weather and all the factors in agriculture of which we are so well aware.
I suggest that the representatives of the United Kingdom argue in Brussels that the marketing boards have much to offer. The marketing boards are not new to Common Market countries. France markets the vast majority of its grain through an organisation called ONIC. There are other co-operatives in Europe, which could be moulded into marketing boards given the necessary will. Today we have heard criticism after criticism. Let us try to be positive and make suggestions for putting the matter right.
I listened with interest to the critical remarks that were made on the subject of vegetable oil substitution for butter and margarine, on the proposed duty on isomerose production, and on the question of imposing conditions in relation to ice cream and certain other dairy products. Let us leave aside the jokes about cream sherry and the Milky Way and be serious.
If those products are sold on a subsidised basis, the market will be destroyed. There will not be the extra capacity. There may not be a demand for the product. The solution may be to


take the argument to its logical conclusion and say: if ice cream, why not real cream instead of imported goods that cost us foreign currency? I do not know whether the consumer will like this proposal. I know that the manufacturer does not like it, because he does not like dealing with these raw materials.
I have some knowledge of the sugar industry. Until very recently I was closely connected with it. Isomerose production is expected to be 400,000 tons a year. If my calculations are correct, that will replace 200,000 acres of sugar beet production. If the Minister's solution to the problem is to tax isomerose so that its price is the same as that of sugar, he may well not achieve his objective. My instinct suggests that we should be moderate and have a system that is cheaper and more efficient, whether the item is food or anything else. We must take a step forward, and not be Luddites.
Isomerose is made from imported maize. Therefore, in the protective tariff wall put up around the Community for all imported foodstuffs there may be a case for saying that an extra duty should be imposed on maize so as to protect the domestic sugar beet producer. I mean any sugar beet producer within the Community. Maize is used to the greatest extent for cattle food. That is the biggest consumer of maize within the Community.
If it had been decided that taxing isomerose as an individual item would be advantageous to the beet producer, I would not have minded if the manufacturers had been told before they had started building their plants. But to decide it after they built their plants imports an element of unfairness.
We must be quite clear within the Community whether this form of protectionism is acceptable. If it is not, we must find a better solution. This is merely restricting the consumption of domestically produced products in favour of imported goods, and this applies in all three cases. I am sorry that it will affect some manufacturing industries. This is what we must weigh up.
I do not believe that the CAP is ideal, but I certainly do not believe that the old deficiency payment system was ideal. It is extremely unsatisfactory that we should be seen to be selling surpluses to Communist and other countries at

ludicrous prices when our own consumers want the best deal possible. But I believe also that the criticisms voiced here today have been particularly destructive and not constructive.
The right hon. Member for Battersea, North (Mr. Jay) read out a list of items that could be produced more cheaply in other countries. That is nothing new. Wheat from Manitoba will always be cheaper than wheat from Hampshire, because Manitoba is a more economical place to grow wheat. Equally, Argentina is a better place for beef and New Zealand is a better place for dairy products. These are facts of life. If we do not protect our farmers as a matter of policy there are severe implications, not only for production, but for the capacity of farmers as employers, for the social structure of the countryside, for our strategic position, and for the substantial consuming power of the farmer in the industrial field.

Mr. Jay: I have always supported the deficiency payments system because it avoids the present conflict between farmer and consumer.

Mr. Wiggin: With due respect, I do not accept that. I tried to run a farming business under the deficiency payments scheme, under which one was always subject to the whim of the Government of the day. The Government adjusted their prices to suit the Treasury and these were almost never in the interests of the producer. Also, it had substantial long-term implications. The day that the farmer of this country is allowed to go to the wall will be a sad day for this nation.

9.52 p.m.

Mr. John Watkinson: I certainly agree with the comments of the hon. Member for Weston-super-Mare (Mr. Wiggin) about the CAP being far from ideal. I will go along with that—extend it further and say that the CAP is a system that I, personally, would like to see scrapped. The hon. Member also pointed to the important issue of the problems confronting British, farmers and farm incomes at this time. He was right to point out to the House—and I know this from conversations with my own farmers—the dramatic increase in the cost of production that


farmers have had to face and the virtual impossibility of buying new machinery. Farmers are having very difficult times.
It seems to me that this is a real problem. Set alongside it there is the problem of the consumer. This was illustrated in a recent edition of Farmers' Weekly. On one page were the views of the National Farmers' Union about the proposals from the Commission being "totally inadequate". On the opposite page there was a survey by the Ministry of Agriculture about food consumption in this country. The Minister referred to this in his speech. The survey shows that housewives last year bought less milk, butter, eggs, fish, mutton and lamb, white bread, citrus fruit and tea. It is also the case that in the last three months of the year the consumption of bacon fell to its lowest level since 1951.
My right hon. Friend is being unfairly accused of taking an interest only in the consumer. But he has been attempting to point out to the EEC and to the farming community the difficulties in the present situation. The farming community is asking for a devaluation of the green pound, which would bring about an increase in prices here. But one has to ask whether that would be in the best interests of the farming community, because we have evidence of consumer resistance. For a long time, it has been a fundamental objection by consumer bodies that they have not been represented at the negotiating table. The consumers are now expressing their views through the shopping basket. They are withdrawing their custom because of exceedingly high prices.
Furthermore, the problem in relation to the British consumption of foodstuffs is exacerbated in that, I suspect, the demand for various types of food here is much more elastic than it is on the Continent. We may all bemoan the fact, but it is the case that the British consumer is less concerned about the quality and the nature of the food he consumes than probably his Continental counterpart. To that extent, the price factor in the equation probably weighs very heavily with him, and the net result could be, as my right hon. Friend pointed out, that

a devaluation of the green pound, an increase in the price of the end product for consumption, would actually produce reduced farm incomes.
All I am saying is that this is the reality, and something that we have to bear in mind when we point, as the hon. Gentleman legitimately did, to the difficulties facing farmers. With respect to some of my hon. Friends, I think that on occasion we can give the impression that we are somewhat consumer-oriented. It is right, therefore, that at least I should point out—and I know that some of my hon. Friends would agree with me—that we are aware of the problems and difficulties facing farmers and the difficulties relating to their falling incomes. But I do not think that the case is made out that a devaluation in the green pound would assist our farmers.
As I have said, I am opposed to the present operation of the CAP. This is because I take the view that the system of support used in it—the end price support system—has the inevitable consequence of producing surpluses. These are not infrequent, but occur year in year out, and I suspect that we shall be referring to surpluses, if we still have the CAP, in every debate hereafter. It is a basic and fundamental consequence of the system.
Given the fact that there is in European agriculture an inherent tendency to overproduce, and given the end price system, I think we shall get surpluses. Given those surpluses, I think that my right hon. Friend was right to point out that it is vital that we should have a policy. Hon. Members are probably getting impatient with the Commission because of the delays in producing a coherent policy to deal with the surpluses. The way in which part of the butter mountain was disposed of to the Russians was grotesque. It seems to me that we are in a position to have a policy—a welfare policy—of utilising these surpluses for the old and the young within the Community itself.
I would like to go somewhat further than this. I do not want to see agriculture purely in the European context. I want to see it in a wider context. We—

It being Ten o'clock, the debate stood adjourned.

BUSINESS OF THE HOUSE

Ordered,
That the Water Charges Equalisation Bill and the Nuclear Industry (Finance) Bill may be proceeded with at this day's sitting, though opposed, until any hour.—[Mr. Tinn.]

EUROPEAN COMMUNITY (AGRICULTURE PROPOSALS)

Question again proposed, That the amendment be made.

Mr. Watkinson: We have to see agriculture in the context of the world need for food, and to this extent I should like to see the Common Market attempting to integrate itself much more into the United Nations programmes for providing food for the needy throughout the rest of the world. This seems to be a very positive approach.

Mrs. Elaine Kellett-Bowman: Is the hon. Gentleman aware that demand from the third world for dried milk, for example, is fully satisfied and that there is a health risk in giving undue quantities when its use cannot be adequately supervised? It can give enteritis to small children if the water supply is not of adequate quality and if the mixture is not of the correct strength.

Mr. Watkinson: I am grateful to the hon. Lady for pointing that out, but my argument is general, not particular. I take her particular point.
I should like to see the Community developing in a more outward direction. Community preference automatically means that we are inward-looking. The extent to which consumers in this country and in Europe could benefit from cheaper food supplies available on the world market has been discussed at some length this afternoon. I should like to see consumers in this country being able to take advantage of this.
I, too, am a supporter of the deficiency payment system, which seemed to be well suited to the needs of this country. I do not go so far as to say that the system could be applied in Europe, because our European partners are not importers to the same degree as we are, but it was and still is a system that could operate very much to the advantage of people in this country.
It has been argued that, while we are part of the CAP, it must make sense to expand our own agriculture as far as possible. The document "Food from Our Own Resources" is one that we should rely on to give a positive impetus to the development of our home agriculture. Under the old system at least we could obtain cheap imports, but now we are getting expensive imports from the Common Market. It must pay us, and it must be an advantage, to develop our home-based agriculture.
I agree with the hon. Member for Weston-super-Mare in his remarks about the Milk Marketing Board. I suspect that everyone in the House agrees that we should give our total support to the Minister on that point.
I turn now to the crucial area of pig farmers. I appreciate that this is not an integral part of these negotiations, but I must tell the Minister that according to pig farmers in my constituency their situation is desperate. Time is of the essence.
It is vital to get some form of solution on the mca. We have all identified the problem, but it would not help the pig farmers, for example, to devalue the green pound. It would not be of any great assistance to them because they need to lower their prices to sell more. In this case a realignment of the mca based on cereal prices is vital.
My pig farmers feel that they are caught in a political game and are being destroyed while the game is being played out. I hope that my right hon. Friend will go to Brussels soon and negotiate something positive to the advantage of pig producers in this country.

Mr. Jopling: Does the hon. Member recall the speech earlier in the debate by my right hon. Friend the Member for Yeovil (Mr. Peyton)? Does he agree with what my right hon. Friend said—that the Minister, having talked at great length about not being prepared to devalue the green pound unless he gets something in return—a perfectly reasonable attitude—has in the renegotiation of the pig mcas a subject upon which he can make a deal pretty quickly? Does he agree that devaluing the green pound in order to get a new system of evaluating the pig mcas would be a good deal?

Mr. Watkinson: I cannot speak for my right hon. Friend, but I believe that the argument about the mcas stands by itself. It seems that we have a perfectly justifiable case for asking that there 'should be a realignment of the mca. That argument stands alone and is perfectly justified in the terms in which we are putting it.
In conclusion, I wish to emphasise the point that I have made previously to my right hon. Friend. I believe that he is sympathetic to it and it will do no harm

to restate it. It is that I hope that in the coming Budget something will be done to reform the way in which farmers pay tax. It would be to the advantage of the farming community to have a rolling tax programme covering three years. That would help it to take the bad years with the good. I ask my right hon. Friend to use what muscle he has with my right hon. Friends the Chancellor of the Exchequer and the Chief Secretary to the Treasury with a view to securing this arrangement.

10.8 p.m.

Mr. Robin Maxwell-Hyslop: I wish to dwell upon one point which could be overlooked. In the late 1960s the then Labour Government welcomed the report from Little Neddy which pointed out the contribution which British agriculture could make to the balance of payments. The only trouble was that the report recommended a specific cash injection, and though the Government welcomed the report they did not give the cash injection.
Then the White Paper "Food from Our Own Resources" was published. That was updated recently in a Written Answer to me. But it is no good the Government paying lip service to that proposition if they do not provide the financial basis on which we can provide food from our own resources. The Minister made only an oblique reference to it when he said that he would like farmers and their wives to have a fair income. That could mean anything or nothing. What he did not tell us was whether it was Government policy to have import substitution for food. By Government policy I do not mean a statement from a Minister saying that he would like us to save foreign currency by expanding our home production. I mean a commitment to provide profits out of which the investment can be made to secure that extra production. It is not words but cash that talks in this context.
It has been pointed out in the debate that sometimes, paradoxically, when there is a reduction in price there is an increase in output. I agree that that is so, but it is a very short-term phenomenon. To go in for long-term import substitution by increasing the proportion of home-produced food would require a considerable capital injection. The under-recouping of increases in costs by not allowing producer prices to increase by the amount that costs have increased results, of necessity, in the running down of capital instead of the building up of capital.
There is a direct relationship between capital investment in agriculture and total production. That is absolutely undeniable. It is also true that one of the reasons for the present slump in the engineering industry in the Midlands is that many farmers cannot afford

their normal purchases of agricultural machinery and equipment. Moreover, these prices are allowed to rise pari passu with the increase in manufacturers' costs. That results in a situation where the consumer—in this case the farmer—is not allowed an increase of price to cover his increase in costs but those who are supplying him are. Inevitably that causes avoidable unemployment in the manufacturing industries that supply agriculture. Therefore, if the Government are interested in avoiding unnecessary unemployment they should not always think of the slightly esoteric schemes such as some of those that the Department of Employment has proposed.
One way to increase employment is to ensure that the large home market for the output of our own engineering industry is not artificially attenuated by depriving the industry of the capital that it needs not only for the current purchases of equipment but for import substitution, which I believe is still, in theory, the Government's policy to achieve.

10.12 p.m.

Mr. Leslie Spriggs: My right hon. Friend the Member for Battersea, North (Mr. Jay) referred to the deficiency payments to our farming industry. I refer to that again because Opposition hon. Members said that my right hon. Friend had criticised the CAP but had nothing to put in its place. They said that he had no alternative to the CAP. That is untrue, because my right hon. Friend made a case for the deficiency payments, which worked well before Britain joined the EEC.
We should understand that the Common Market does not involve the CAP alone but concerns a new European policy and a new balance of economic and military power in Western Europe. To those who have referred to the CAP and to nothing else I suggest that they look at that carefully in the light of changing events in Europe and of the responsibility being placed upon the shoulders of each member State in the Community.
My right hon. Friend was correct when he referred to the increased cost of living as a result of the CAP. No one has denied that. I regret that so many right hon. and hon. Members believe in the


high price policy. Those of us who travelled in Europe before Britain entered the Common Market knew full well that there was a big difference between our pricing policy and that of the countries of Europe. Our prices were much lower than theirs. That was known by all concerned in Government circles.
Because of the importance that Governments attached to the replacement of American forces leaving Europe for other parts of the world, it was realised that there was a vacuum to be filled by the nations of Western Europe. I believe that that is the principal reason why Britain joined the Common Market.
My right hon. Friend the Minister referred to what would happen if the green pound were devalued. I have had the opportunity of looking very carefully at the figures. If there were a 6 per cent. devaluation, it would mean to British housewives and the consumer at home in general an increase in the cost of living, on basic foods, of about £225 million a year. There is a very strong case for my right hon. Friend explaining to his colleagues in Europe what Britain and the British Government are faced with at present. There can be no doubt that unless we get a third round of the social contract, Britain will be in serious economic trouble.

Mr. Jopling: We are in trouble already.

Mr. Spriggs: No matter which party is in power, unless there is a social contract and an agreement serious trouble will be brewing in Britain. The hon. Member for Westmorland (Mr. Jopling) may think that this is funny. Let me tell him and his hon. Friends that a great amount of the present social unrest and the opposition to the social contract results from the rising cost of living, especially the cost of basic foods that the ordinary people of Britain require. If he can laugh that one off, he can laugh at anything. This is a deadly serious matter, and I plead with the hon. Gentleman not to laugh at matters that are so important.
Making his report this afternoon, my right hon. Friend the Minister gave an indication of the problems with which he is faced when he attends meetings in Europe. Anyone who listened to him when he spoke about the fishing agreement will have heard him state that as

President of the Council he had been able to make a statement first and then to take instructions from the Council and, from there on, he signed the document.
We should all be interested in Britain's fishing industry. It is not a matter merely for those who make their living from fishing or who live in our fishing ports. Fishing is a matter that concerns all of us. Fish is a very important food. Britain relies to a great extent on fish. The Minister was able to tell us that we have reached agreement with the countries of Europe. [Interruption.] If the hon. Member for Westmorland does not know that, I want to appeal to all hon. Members—

Mr. Jopling: On a point of order, Mr. Speaker. We seem to be merging into a fishing debate. I did not think that any of the documents we are discussing had anything to do with fishing. I have listened to the hon. Gentleman talking about fishing for quite a time, but he is going on about fishing. Is that in order?

Mr. Speaker: I think that the hon. Gentleman is just about to cline back to the point.

Mr. Spriggs: I am grateful to you, Mr. Speaker, for explaining to the hon. Gentleman, who did not understand, that I was making only a passing reference to the Minister's report.
The case made out for the amendment, which I shall support, is sound. I appeal to hon. Members on both sides to go into the Lobby tonight to support it.

10.21 p.m.

Mr. Nicholas Winterton: I am pleased that the Minister, the Minister of State and the Parliamentary Secretary have been present during most of the debate. I believe that this is helpful to the House, because perhaps the Ministers will heed some of the constructive comments made. Agricultural debates are all too infrequent, particularly those in which we can range widely as we are able to do in this debate today.
I shall direct my remarks to three main areas—milk, beef and pigmeat. Before I do that I want to refer to a comment made by my hon. Friend the Member for Holland with Boston (Mr. Body.) He is a practising farmer, and those of us who listened to his excellent


speech know that until 1st January 1976 he was a pig farmer. But he left pigs just in time. He said that farmers kept quiet about the fact that their existence was subsidised by the taxpayer. On behalf of the British farmer, I object to that remark. I believe that my hon. Friend was being less than fair.
We have had systems of agricultural support and food prices support which have meant that the British farmer has been able to obtain only a part of the economic cost of producing food directly from the consumer. The balance, in one way or another, is made up by the taxpayer.
I was interested in the remarks of the hon. Member for Gloucestershire, West (Mr. Watkinson), who said that a green pound devaluation would not overall help British farming. I am not sure that this view is supported by the National Farmers Union. If he holds that opinion he should tell the House and his hon. Friends on the Treasury Bench how British farming is to receive a fair return for its work and investment. He stated, as did other hon. Members, that farming incomes were falling and costs were rising, and, as a result, farmers were not receiving a fair return for their investment and work.
This situation automatically leads me on to "Food from Our Own Resources". The document was launched by the present Administration, and we were delighted to support it. It clearly stated that we should produce much more of our own temperate food than we have done in the past. This would produce a substantial saving for us on our balance of payments. I think that all hon. Members were wholeheartedly in favour of that objective, but has Government policy since then set out to achieve that objective? I do not believe that it has.
I ask the Minister to direct his attention "Food from Our Own Resources" and to tell the House, which is concerned about the amount of food we produce, where the money will come from to enable farmers to play the vital part in our economy which they are fully competent to do. It is wrong that their investment should be so badly remunerated and that they should suffer such disincentives from the Government Benches.
It would appear from some of the things said particularly by Labour Members, who are totally consumer-oriented and have little understanding of the production of food, that the much-mentioned surpluses are massive mountains, accounting for months of consumption within the EEC. I hope that the Minister will confirm that even the largest surplus in Europe has accounted for only about five weeks' consumption of a particular commodity. They are not mountains at all: we need to get this matter into perspective.
An editorial in a recent edition of the Daily Telegraph clearly emphasises that, while we might be unhappy about surpluses and might want some modest amendments to the CAP, just because we do not like things as they are does not mean that we are anti-Europe. To use a comparison for the benefit of my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith), I will quote the editorial:
But is is not as simple as that. It is perfectly possible to criticise Exchequer subsidies for Glasgow council tenants or Highland crofters or what you will and yet remain firmly in favour of the Act of Union.
I am not getting at my hon. Friend when I refer to the Act of Union: I hope that he believes in it as firmly as I do. I am trying to establish that, as a member of the EEC, this country should set about trying to amend the CAP to produce an acceptable system.
I would say to the right hon. Member for Battersea, North (Mr. Jay), who has always been consistent in this matter, that we have an efficient agricultural industry. I want to see us produce as much food from our own resources as we can and not allow sectors of our industry to be undermined and destroyed by European inefficiency. I hope that on that point I shall have his full support.

Mr. Jay: indicated assent.

Mr. Winterton: I am a pro-economic European, although not in favour of a federal or monetary union.
One of the three areas about which I want to speak is pigmeat. A friend of mine in my constituency is a substantial pig farmer. He visited the House as part of an NFU delegation recently, meeting hon. Members on this side and members of the Government. He is a highly


efficient farmer, with anything between 1,500 and 2,000 pigs at any time. He said that, despite recent Government assistance, on every pig he produces he loses £1·86.
That situation cannot continue. How right the hon. Member for Gloucestershire, West was to urge the Government to take some action over pigs. The basis of the MCAs should be cereals rather than the pigmeat intervention price. I hope that in the near future this change, which would be welcomed by all in the industry, will be announced by the Minister after negotiation.
I have a major constituency interest in milk. Some statistics might help. There are 2,703,000 dairy cows in England and Wales, owned by 56,081 producers, giving 6·8 million gallons daily, of which 2·6 million gallons are used for manufacturing purposes and 4·2 million gallons are pasteurised, filled daily into 32 million bottles for distribution in 40,000 vehicles by 40,000 salesmen to 15 million homes, representing 92 per cent. of households. Those salesmen collect £20 million a week from the English and Welsh public.
Those figures clearly indicate that the dairy trade is a substantial industry. It worries me that we shall tinker with the system, that we shall not act when necessary, and that the doorstep delivery service in this country—which is so important to British housewives—may disappear before the housewives and consumers of the country know what is happening. We are the only country in the EEC that has a daily doorstep delivery. It is a valuable service and is balanced on a knife edge financially. If our particular interests were not understood within the EEC and the wrong policies were carried out, the service could quickly disappear.
The milk producers of this country are not happy with the proposals that we are debating tonight, because dairy farmers have incurred substantial additional costs during the last 12 months. The price increases that they are likely to receive as a result of the EEC proposals are not likely to be sufficient. I am aware that I may not have the full support of the Opposition spokesman in this, but I have discussed the proposal with my local branches of the NFU and with farmers in my constituency, and they are not

happy. They believe that it will be difficult for them to remain in business and keep the number of milking cows that they now have.
Finally, I refer to beef. Many people believe that beef can be separated from the dairy sector but, in fact, they go together. Therefore, I hope that I shall be understood if I speak about beef after talking about the dairy and milk sector. There is no doubt—and I hope that the hon. Member for Londonderry (Mr. Ross) will also raise this point—that there has been serious undermining of the position of the United Kingdom beef sector by the unloading of cattle from the Republic of Ireland on to the English market. The situation has now improved, but it could well happen again.
There is a differential in the green pound between the Irish Free State and the United Kingdom, and it enables producers in the Republic—to their advantage and to our disadvantage—to unload beef cattle on to the British market. I know that we have made special arrangements for Ulster to try to deal with the matter, but the industry here has been undermined. It has suffered severely from the dumping of beef cattle on to the United Kingdom market from the Irish Free State. I hope that this matter can be attended to.
The farming industry in this country wants to play its full part in the recovery of the United Kingdom economy. The industry can do that, but only if it is given the weapons and the wherewithal to do so by the Government. I make this plea. The debate has been interesting and useful contributions have been made from both sides. I hope that the reply at the end of the debate will be worthy of the Ministry and that it will give encouragement to the United Kingdom farming industry.

10.34 p.m.

Mr. Peter Hardy: I had not intended to speak in the debate, but the hon. Member for Macclesfield (Mr. Winterton) has driven me to it, particularly by his suggestion that hon. Members on this side are consumer-oriented. By implication, he suggested that his party represents the farmers and the rural areas. If that is so, it is a pity that there are only three Back Bench


Tories present during such an important debate.
The hon. Member for Macclesfield raised a number of points about areas in agriculture where there are serious problems. Like him, I have met farmers in my constituency recently. I meet them regularly, and I am well aware of the problems that they have to face. It is unfair of the hon. Member not to acknowledge that when the Labour Party took office in the hard winter of 1974—hard in economic terms if not in climate—there were areas of British agriculture that were in dire trouble. I remember talking to pig farmers in my constituency during the February 1974 General Election. I have kept in touch with them fairly diligently while I have been a Member of this House. I know that the attempt by the Government to give assistance recently was not as successful as some of us might have wished.
The pig farmers in the Macclesfield constituency may be as efficient as some of those in my constituency. I accept the point made by the hon. Member for Macclesfield that the costs of pig farmers throughout this year will be about 35p or 36p per pound and that their returns will not cover their costs. However, the hon. Gentleman was not sufficiently grateful to the Government for seeking to go some way towards helping them weather this downturn in the cycle.
Returns in pig farming are cyclical, and our experience of Irish pigmeat being available at 28p a pound in recent weeks has not helped. However, this is a temporary phenomenon, and I expect that in the spring and summer the returns and rewards to pig farmers will improve.
The 50p per score premium introduced by the Government as temporary assistance in 1974 substantially increased the returns of pig farmers. In 1975, they were receiving £6·40 per score, which gave them considerable margins. That was the top of the cycle and we are now at the bottom. I hope that we shall soon see a recovery, but it is wrong for the hon. Member for Macclesfield to suggest that farmers entered a period of economic difficulty and, in some cases, destitution because of this Government's policies.
I recall the plight of the dairy farmer in 1973–74 when hon. Members opposite

were mutedly complaining to their Government about the dire straits, if not in cereals, certainly throughout the range of livestock farming in many areas.
In 1974, while dairying in Britain was in a very sharp decline, the Government allowed the price of milk to the consumer to rise substantially and the price available to the farmer to rise even more substantially to ensure that the appalling decline in dairy farming which had gone on since 1973 was arrested.
The hon. Member for Macclesfield entertained the House with some valuable and interesting statistics about the importance of the dairy industry. He told us how many cows there are, how much milk is produced and how much of that was available for manufacturing. He should remember that in 1974 and 1975 those responsible for dairy product manufacturing had grave anxiety about where they would get supplies. It seemed that there would be difficulty in meeting the demand for liquid milk, let alone the production of dairy products. Further assistance was given to the dairy farmers in 1975, and it is unreasonable for hon. Members on the thinly attended Benches opposite to pour scorn on this side of the House for being consumer-oriented and having no interest in agriculture. Those of us with rural constituencies seek diligently to maintain an understanding and awareness of farmers' views, and it is a great pity that British fanners too often do not know where their real friends are. If they look back, they will see that British agriculture was brought to the point of ruin by a Conservative Government in the 1930s applying the sort of policies that have always been dear to their hearts. In 1947 the foundations for prosperity in agriculture were laid by a Labour Government.
I welcomed the references to the document "Food from Our Own Resources". It was an important document, and I believe that in the long term this Government—indeed, any Government—will have to observe the policies and ideas embraced in that document. It is important that food should be produced at maximum level. That means that we need to encourage home food production—if only to ensure that other areas of the world can consume the food that we now take from them because we do not produce it for ourselves.
I accept that we shall not meet the targets set out in that document unless there is a proper return to the British economy in promoting investment, but at the same time Opposition Members, if they are concerned with the best interests of this country, have to walk a difficult tightrope. They must ensure that food prices do not explode, because that would not be in the best interests of British farmers. However, if all the claims made by the Opposition were met, the effect on the nation's economy would be disastrous. The Government have to ensure that farm returns are increased as much as is compatible with the economic needs of the nation—

Mrs. Kellett-Bowman: Such as in respect of gas?

Mr. Hardy: If the hon. Lady attended the House more regularly, and more quietly, she would understand that there are important reasons for a national, and, indeed, a global, view on energy matters. However, I must not be tempted to stray into other areas because it is agriculture that is occupying our attention in this debate, and we must not allow ourselves to be diverted. I could go into the subject of coal needs, because that, too, is an important matter in my constituency, but I am seeking to emphasise in this debate that it is the production of food in Britain that should be sustained. No doubt if farm incomes were allowed to soar to the extent Opposition Members would like, the hon. Member for Lancaster (Mrs. Kellett-Bowman) would knock on doors in her constituency and tell her constituents that the Labour Government were letting the farmers have all the money.

Mr. Nicholas Winterton: The hon. Gentleman has made a good deal of play with the milk situation. Will he explain why the Labour Government reduced the price of milk to the consumer and have subsequently allowed it to rise to the highest level ever—and, at a time of difficulty, have removed virtually all the subsidy?

Mr. Hardy: I thought the hon. Gentleman was complaining earlier about the Labour Party's interest in the consumer. Our interest in the consumer was demonstrated by the point he made. He did

not make the point that while, by subsidy, the price of milk was diminished the return available to the dairy farmer was not reduced, and indeed that he enjoyed a substantial increase. But the hon. Gentleman must not divert me from the point.
Although the Government cannot allow farm incomes to rise to the level farmers would like, I believe that it is essential for steps to be taken to try to assist them. Farmers have been badly hit by the drought, and that fact may have been forgotten by the Opposition. I hope they have not forgotten that the weather affects farm production, as was clearly illustrated in a recent agricultural Question Time. In many areas of England—Scotland was much more fortunate, as it seems to be fortunate in many areas at present—the farmers suffered a difficult time last year and incurred considerable debt. That may have been a temporary situation but they were hit by the weather. I hope that when my right lion. Friend the Chancellor of the Exchequer comes to the Budget later this month he will find a way of rolling over the tax arrangements for agriculture to help tide the farmers over this difficult period. Fortunately, we face the spring and the summer with rather more water than we are accustomed to and the outlook for production for the rest of the year, and perhaps 1978, is very much better.
I have spoken long enough, and rather longer than I intended, but I wished to remind the House that, although the pork, pigmeat, dairying and beef sectors referred to by the hon. Member for Macclesfield may not be in the best possible condition, they are now more viable and have received far more encouragement from the Labour Government than they received from the Conservative Administration judging by their state when inherited by the present Administration in 1974.
I urge my right hon. and hon. Friends to ensure that agriculture is sustained, but it must not be sustained at the risk of grave peril to the nation. It is time that that was realised by Opposition Members.

10.47 p.m.

Mr. James Scott-Hopkins: This has been a long debate and we have covered a great many subjects.


As my hon. Friend the Member for Macclesfield (Mr. Winterton) said, it is a debate in which we can range widely over the whole of agriculture. Indeed, the hon. Member for St. Helens (Mr. Spriggs) ranged over fishing as well.
This is an important debate for other reasons. I wonder whether the House has realised what a change has taken place during the time that Britain has been a member of the Community. Before we became a member we had an annual Price Review. Ministers announced the review and there was half an hour of question and answer. If the Government felt so inclined, there was a one-day debate a week or a month later. That took place after the event. It took place after Ministers had made up their minds after consultation with the industry. The right hon. Member for Battersea, North (Mr. Jay) knows that that is true. That was the position in his day and in the days of Conservative Governments.
The situation has changed. We now debate these matters and hon. Members seek to tell Ministers and the House generally what they hope Ministers will do in the negotiations that they are having with their opposite numbers in the eight other countries in coming to a conclusion in the negotiations that set the framework within which farming will have to operate during the next 12 months.
Things have changed since I first came to the House many years ago. I remember being told most strictly by right hon. and hon. Members that, having made a speech, it was considered courteous to stay behind to hear the reply from the Government Front Bench. I look around and I see not very many of the Labour Members who made interventions. Doubtless they have all been taken ill or have pressing engagements elsewhere. As I say, things have changed since I first came to the House. I regret it and say no more than that.
The Minister of Agriculture, Fisheries and Food made a strange speech. He concentrated, understandably, on the level of prices and the position of the consumer. Those are unquestionably important issues. However, as the hon. Member for Rother Valley (Mr. Hardy) said, it is not consumers on one side and producers on the other. We all represent

producers and consumers and we all have an interest in both sides. The hon. Member for Cardigan (Mr. Howells) said that consumption and production are going down. Consumers are buying less and producers are producing less.
The Minister concentrated his remarks more on one side than I expected. I was amazed that, as my right hon. Friend the Member for Yeovil (Mr. Peyton) said, he did not get down to the increased costs that the farming industry has had to face in the past 12 months. My right hon. Friend gave the figures. I shall not weary the House by repeating them. There has been a considerable increase.
The Minister signally failed to tell us his view on the Commission's package. It is a package deal, as my right hon. Friend said. Let us consider the package deal. On the one hand, we have the proposal to devalue the green pound. I shall say more about that later. Linked with that are the minimal rise of 3 per cent. and the two transitional steps. Is the Minister prepared to accept that as a package? If not, what part will he throw out of the window and what part will he trade off for what gain? If he considers the green pound to be not so important and he wishes to use it as a bargaining counter—that has been implied—what does he hope to get for it?
The right hon. Gentleman made the point that if we were to devalue the green pound he would want substantial benefits for this country in return. Of course. But what are the substantial benefits that he wants? Would it be sufficient to get a new system of calculating the MCAs for the pig producers? The Minister shakes his head. That is fine. Let him tell the House whether he would consider that to be sufficient in the national interest.

Mr. John Silkin: To save time, if the hon. Gentleman cares to read my speech in Hansard he will see that I dealt with that.

Mr. Scott-Hopkins: I listened to every word of the Minister's speech. I do not think that he was specific enough in what he said. All he said was that he wanted an equivalent amount of what he thought it would be.
I gathered from colleagues to whom I have talked and with whom I have debated in the European Parliament and in its committees in the last 24 hours that


they are not prepared to give much to the right hon. Gentleman. As he knows, this country's credit—not his personal credit—is running dry because of our behaviour in the Community.
The House must understand that all the various parts of the package, including the transitional steps, will mean a rise of between 14½ per cent. and 15 per cent. for our farming industry. Many countries in Europe will get nothing like that. So there is a controversy. The right hon. Gentleman will face difficulties when he is negotiating in Brussels, but he maintains that he wants a minimal rise here.
We have heard over the ticker tape what the Minister has negotiated and agreed for those commodities which are outside the common agricultural policy. I shall not weary the House with all the figures. The two main items are an increase of 16 per cent. on Iamb and 31 per cent. on wool. The right hon. Gentleman is saying that he wants to keep everything down and that he sees no excuse for any type of rise. He will presumably argue that this will be on a par, but that is what the rises will be if the Community package is accepted. This must mean that in his mind he is not only accepting the transitional stages but also the devaluation of the green pound. That is the only way in which we can get anywhere near the 14½ per cent. figure.
I turn to the MCAs and the green pound. It is understandable that the right hon. Gentleman should wish to operate the green pound as it is. I am not sure whether it is quite so much of an advantage for our consumers. We get a subsidy from the MCA because of the disparity of the green pound. But this encourages our importers, and their exporters, to sell to us because of the advantages. As my hon. Friends, and some hon. Members opposite, have said, there is an advantage, particularly in selling into the pigmeat market, to countries like Germany, and Denmark.
We must remember that two-thirds of the price of whatever product comes into this country has to be paid across the exchanges in sterling currency. The subsidy to the consumer from the MCA goes to the producing countries like Germany, France and Denmark. Therefore, two-thirds of the cost of the product,

sometimes more, goes across the exchanges. That is not to the advantage of this country, because it increases our import bill.
I fail to understand why the right hon. Gentleman is unwilling to accept the package and devalue the green pound, because the MCAs would gradually get smaller and he would have a little more money available to devote to expanding British agriculture while at the same time honouring his promises in "Food from Our Own Resources" and the previous document. It seems quite logical that this is what he should do.
There would then be an advantage to our farmers—and to the consumers, because more would be available on the home market from our own resources. It is an argument that is certainly worth considering. I cannot understand why the right hon. Gentleman does not accept that this is one way of looking at the problem.

Mr. Spriggs: The hon. Gentleman appears to be in favour of devaluing the green pound by 14 per cent. Does he not agree that if that happened many of the low-wage earners could not live?

Mr. Scott-Hopkins: The hon. Gentle man's intervention was rather like his speech. He did not get it right. I said the total of all the elements in the package put forward by the Commission came to an upward figure of between 14 per cent and 142 per cent. The green pound would be 6·3 per cent., no more.

Mr. Spriggs: That is about £225 million.

Mr. Scott-Hopkins: Perhaps the hon. Gentleman will listen a little more closely.
I come on to surpluses. I agree with those hon. Members who said that we must keep a sense of proportion in this matter. At the moment there is a surplus of butter and skimmed milk powder. The figures given by the Commissioner only last week showed that at the moment there is a surplus of 550,000 tonnes of dried skimmed milk, while the actual amount of butter in surplus is just under 200,000 tonnes. To put into perspective the matter of sales to countries outside the Community, the Commissioner expects that during the whole of 1977 sales of subsidised butter externally will amount to between 120,000 tonnes and 150,000 tonnes.
The hon. Member for Durham (Mr. Hughes) said that it is three times more costly to subsidise internal sales than it is to subsidise external sales. The reason for the subsidies is that there has been production of milk over and above the amount required in the Community. We must have a surplus. The Community's policy should always be to plan to be slightly in surplus of what is required. One of the advantages of the Community's action is that it has guaranteed a constant supply of food to consumers throughout the whole of its existence.

Mr. Jay: If the hon. Gentleman thinks that these surpluses are being built up because it is desirable to have stocks at this level, why are they sold to Russia and others at such absurd prices?

Mr. Scott-Hopkins: As the hon. Gentle-mans knows full well, the butter surplus is just under 2 lbs. per head per person, which is minimal. He probably has more than that in his refrigerator. There is nothing wrong with external trade. It is well known that I would much rather that the Community were able to feed the people within the Community and that the trade that is being done with Russia were done at world market prices.
The recent sale to Russia was not on the same terms as the sale in 1973–74, when the price was specially subsidised. The recent sale was at the world market price. A minimal amount of butter—30,000 tonnes—was sold at absolutely the top price.
It is important to maintain a sense of proportion on the question of surpluses. Mistakes are being made, and have been made, about the level of prices. I hope that in his negotiations the Minister will present strong arguments on the measures to be proposed by the Commission. The Commission says that it hopes to be able to reduce to between 1 million and 1½ million cows. This is what the Commission calculates that its proposals will mean if they are accepted by Ministers at the end of next week. I do not believe that the proposals are sufficient and that that will actually happen. I hope that further measures will be proposed. I hope that the Minister will propose that the intervention system, particularly on milk, be re-examined. I hope that we shall be able to secure that

when a surplus arises the intervention level of the guide and target price should vary upwards and downwards: when a surplus arises, the intervention price should fall: when equilibrium is achieved, the price should move to 97 per cent. to 98 per cent. of the guide and target price.
This is only one of many approaches to the problem. I hope that all avenues will be explored. We cannot allow the small, inefficient producer of milk to continue to be supported by a level of prices which just makes it viable for him to keep going. The Commission has produced a package of inducements to encourage the small producer to get out, but I do not think that that will be enough. It is very difficult to tell small farmers to stop producing. About 50 per cent. of milk is produced by farmers who farm fewer than four acres and have two or three cows. These people must be helped out of production, and I hope that certain measures will be taken to encourage them to go. Not all the money for this should come from the agricultural fund, but maybe the Minister could negotiate over this at a later stage.
I do not think that there is any dispute in the House that the Milk Marketing Board must stay. There is a great case for keeping it. I was surprised to hear the questions and doubts expressed by the hon. Member for Crewe (Mrs. Dunwoody). I was in the same room as she was, and heard the same remarks, which were about the legal position. At the end of the transitional period there is a case for the activities of the Board that are not producer-oriented being phased out.
At the instigation of my hon. Friend the Member for Norfolk, North (Mr. Howell), a large and representative contingent of Members and officials of the European Parliament came over here to examine the activities of the Milk Marketing Board. The impression that I have gained over the past six months is that there has been a general understanding of the position in this country, of the efficient way in which the Board works, and of the vital necessity to keep up sales of all milk products that are handled by the Board in the United Kingdom. I believe that the Minister will not have to push very hard on the door in order


to get this accepted at the end of 1977. and I am sure that he will succeed.
On the question of the overall situation, the Minister will have a difficult time, and part of that is his own fault and that of the Government. [Interruption.] Of course it is. The reason for our present difficulties is the astonishing devaluation of our currency caused by the Government's economic policies. The currency has lost over 30 per cent. in value, and this is at the root of our problems. Of course we have consumer resistence to the prices being asked when the standard of living is coming down.
On the other side of the picture is the farmer's need to get a fair return for labour and the capital that he has invested in land and stock. I have the figures for farmers in my constituency, which show how costs have gone up—

Mr. Dennis Canavan: They are capitalists. What about the workers?

Mr. Scott-Hopkins: They are workers as well, and surprising though it may seem to the hon. Gentleman, they are consumers also. They have suffered from inflation and increased costs, and unless we want to see an enormous drop in the level of production in this country, which would be disastrous, something must be done.
The right hon. Gentleman must honour the pledge given in "Food from Our Own Resources" to increase our own food production—there is no reason why that should not be done—and at the same time give the consumers and farmers a fair deal, and the best way to do that is to accept what the Commission has put forward.

Mr. Canavan: A disgraceful speech.

11.10 p.m.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang): The large number of hon. Members who have taken part in the debate adequately reflects the importance of these proposals. Before I reply to the many points raised, I want to say something about the important announcement made today by my right hon. Friend in a Written Answer, giving

the new rates of guarantee for fat sheep and wool in the United Kingdom.
The sheep industry is an important sector of our agriculture. It has particular significance in certain parts of the country, and the Government want to see production expand as envisaged in "Food from Our Own Resources". There was a slight decline in the breeding herd in 1975 and 1976, but it is encouraging to see that a small increase of 1 per cent. was recorded in the December census.
Market prices for mutton and lamb are good and seem likely to stay firm for some time. Store producers also achieved good prices last autumn. The Government are anxious to maintain this confidence and to give further impetus to expansion. We have, therefore, increased the guaranteed price for fat sheep from 99p. per kilogram to 115p—an increase from 45p. a pound to 52·2p. The wool guarantee has been increased from 84p. per kilogram to 110p., an increase from 38p. a pound to 49·9p. a pound.
The hon. Member for Derbyshire, West (Mr. Scott-Hopkins) seems to see some contradiction between that important announcement and our stance in relation to the Commission's proposals. The important point about the announcement is that it relates to increases in the guaranteed prices. They will have no immediate effect on consumer prices, and that illustrates the case put by a number of my hon. Friends about the basic advantages of our traditional system of supporting agricultural prices. I go further and point out that the announcement refutes the suggestion by hon. Members on both sides that the Government are not prepared to give the industry the support and resources it needs to expand. If the hon. Member for Derbyshire, West does not realise how widely welcomed my hon. Friend's announcement will be, the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) will confirm it. It will provide a great deal of encouragement to the sheep industry.
I want to refer now to the effect of the Commission's proposals on prices here. It is surprising that hon. Members opposite, particularly the hon. Member for Derbyshire, West, were able to remain almost oblivious to the implications of the Commission's current proposals for consumer food prices in this country. As


my right hon. Friend explained, the proposed increase in the common prices and the proposed devaluation of the green pound will increase consumer food prices as a whole by 2 per cent. In addition, we have the 2 per cent. increase which derives from the two transitional steps. This is a major problem, and I do not think that anyone seriously concerned about the level of inflation could accept that increases of that order can be justifield in the current circumstances.

Mr. Scott-Hopkins: The hon. Gentleman must he fair about these increases in the cost of living. The second transitional step is at the end of 1977. The various increases in minimum prices will be in September or October. They will be phased over the year. This is not a sudden increase of 2 per cent.

Mr. Strang: I think that the hon. Gentleman has misunderstood the point. Of course the first transitional step comes at the end of the marketing year, and the second comes at the end of the current calendar year. But I am giving the year-on-year increase.
Let me turn to the impact on producers' prices. The right hon. Member for Yeovil (Mr. Peyton) asked specifically for these figures. We expect that the effect on United Kingdom producers' gross receipts of the proposed package plus transition would be to raise them by about 9 per cent. since some market prices are already higher than the institutional prices and some products are scarcely affected by the package.
So much for the effect on domestic prices, but what about the effect of the Commission's proposals on Community prices? For most member States this is a tough package. The vast majority of the other States do not have transitional steps to take, and, far from the proposed changes in their green currencies increasing prices, in the case of Germany and other countries they will decrease the proposed increase. The package will therefore mean a fall in real terms in producer prices in many member States.
That is why it is not surprising that we find the British delegation arguing quite differently from the other delegations. They are asking for an increase in common prices. We are seeking a decrease. Where the Community is in structural

surplus we are justified in seeking a reduction in the common price, not just in the British domestic interest but from the Community's point of view as well.
It was remarkable that the right hon. Member for Yeovil should seek to play down the significance of the current milk surplus in the Community. The hon. Member for North Angus and Mearns did not seem to appreciate the enormity of the structural milk surplus in the Community. The fact is that after the drought there are 250,000 tonnes of butter and over 1 million tonnes of skimmed milk powder in store. Consumption of dairy products is falling while production is continuing to rise. That, of course, is a disaster. Even the Commission has used that word in relation to the milk surplus.
That situation explains why the United Kingdom is arguing that there should be no increase in the common price for milk over the marketing year. That is why, whatever argument there may be for a levy, there is no case for a levy if its effects on producers are immediately to be obliterated by an increase in the price.
As responsible members of the Community we recognise that it is not enough to tackle this problem simply by holding down the price. There is a case for other measures. We are adopting a constructive approach to the Community's milk action programme. We are able to welcome some elements of that programme.
We support the proposed subsidising of school milk. The proposal to accelerate the brucellosis eradication scheme with Community support is acceptable to us. There are, however, other elements in the package to which we are completely opposed, and that is implicit in the Government's acceptance of the amendment in the name of my right hon. Friend the Member for Battersea, North (Mr. Jay).
The proposed levy on fats and oils is unacceptable to the United Kingdom. We cannot accept the exclusive use proposal in its present form. My right hon. Friend the Member for Battersea, North drew attention to the effect which the proposal could have on manufacturers who include non-milk fats or proteins in milk products. The new proposal would not prohibit the manufacture of these products, but it would prevent their being labelled with names suggesting that they


are milk products. We have always supported properly developed labelling rules which tell the consumer what he is buying. We consider that the Commission's present proposal would have consequences for our food industry which go beyond these objectives. Much detailed discussion on the Commission's proposal is now in progress in Brussels. We shall fully satisfy ourselves on the consequences of this or any revised proposal before we decide whether it is acceptable.
I turn to some of the other items in the action programme. We should like to see the proposal to ban investment aids modified before we accept it. We should also like to see the proposed subsidisation of the use of liquid skimmed milk and fresh skimmed milk powder modified before it is acceptable. The proposed non-marketing premiums and the beef conversion scheme form the centre-piece of the milk action programme. The hon. Member for Derbyshire, West acknowledged this in winding up for the Opposition, and my hon. Friend the Member for Durham (Mr. Hughes) made some remarks about the proposal, remarks with which by and large I agree.
We support the proposal as it relates to small producers. We should like to see the ceiling reduced somewhat, but we recognise that a modified proposal of this nature could go some way towards tackling a problem which exists in other member States rather than the United Kingdom.
A number of hon. Members raised the issue of the Milk Marketing Boards, as was proper, because the milk section programme is aimed both at reducing the level of milk production and at increasing milk consumption. We have a high level of consumption in this country, particularly of liquid milk. That derives from the existence of the five United Kingdom Milk Marketing Boards. The hon. Member for North Angus and Mearns slightly misunderstood my right hon. Friend, who was not suggesting that the Board carried out the retail distribution of milk, but properly argued that it was only within a highly controlled framework, with out five United Kingdom Boards and a controlled milk price, that we could expect the system of universal delivery to the doorstep to continue.

If we were to break away from that planned and controlled system—I would describe it as a good example of modern pragmatic Socialism—to the sort of free market that some Conservative Members advocate for other commodities the system would quickly break down. That is why we have made it absolutely clear that we are determined to retain the United Kingdom Milk Marketing Boards.
I now turn to some of the other commodities which hon. Members touched on. On sugar, we are pressing for the maximum price restraint. The Commission has rightly drawn attention to the possibility of an exportable surplus of about 3 million tonnes next year. Overproduction on this scale when the world market is likely to be oversupplied cannot be justified. We fully support the Commission's proposal for a reduction in the B quota to 25 per cent., and we are pressing for agreement on this in the Council.
My right hon. Friend the Member for Battersea, North and a number of other hon. Members raised the question of isoglucose. I assure them that the Government cannot agree to the Commission's proposal that a substantial levy should be placed on isoglucose production. That could make all production of isoglucose in the Community economically unviable. It could also lead to the waste of sums already invested in the production of isoglucose by some firms and to the loss of jobs involved. We have made our difficulties plain in the Council and we have pressed on the Commission the need for further studies on this difficult and complex subject.
I turn now to the subject of beef. We are also pressing for price restraint for that commodity. Clearly, we are moving into a situation in which the price is becoming so high that consumer resistance is substantially building up. We are determined to retain the variable premiums.
Many hon. Members, including my hon. Friends the Members for Gloucestershire, West (Mr. Watkinson) and for Rother Valley (Mr. Hardy) and the hon. Members for North Angus and Mearns and South Angus (Mr. Welsh), have mentioned pigmeat. The proposed increase in the common price of pigmeat is of no importance because it does not influence pigmeat


prices, nor does it have an immediate impact on producers' returns. What is important is the method of calculating the MCAs. My right hon. Friend has raised this issue. He pressed for a recalculation of the pigmeat MCA in September last year, and he has repeatedly argued the case for such a change. Against that background he introduced our own domestic pigmeat subsidy. Hon. Members on both sides of the House supported him in that action.

Mr. Jopling: I do not intend to be offensive but the Minister skirted the main question of the debate in a way to which we are now becoming accustomed. I hope that the Parliamentary Secretary will not do so. The costs of the agricultural industry have gone up by 19 per cent. in the last year. The package proposed by the Commission suggests that prices should go up in recompense by 14 per cent. Before the end of the debate, will the Parliamentary Secretary tell the House how much the Government believe that the industry should have after prices have risen by 19 per cent.?

Mr. Strang: The Commission's proposals would raise United Kingdom institutional prices by 21 per cent. We can modify those proposals substantially and still have the scope to give our producers the return to produce the food that is in our national interest.
I shall now restate the Government's position on the Commission's proposals. My right hon. Friend made the position clear. We take the firm view that the package that is finally agreed must contribute to price restraint and to the reduction of surpluses. We shall continue to press for common support prices to be set at levels that are sensible, that give efficient producers adequate returns and

that do justice to consumers. We must work for better and less wasteful use of Community resources.
I have told my collegaues in the Council of Ministers that, in the United Kingdom's view, it is hard to justify any increase at all for those products, such as milk, which are in structural surplus. We recognise that from the point of view of other member States and Community farmers generally the Commission's price proposals are tough. We therefore face strong pressure for price increases that are greater than those proposed by the Commission. But the Government are determined to negotiate a settlement that takes proper account of the need for price restraint and is consistent with our aims for improvements in the CAP. I am confident that these objectives have the support of the majority of hon. Members in the House.

Amendment agreed to.

Main Question, as amended, agreed to.

Resolved,
That this House takes note of Commission documents R/360/77, R/360/77 Addenda I and 2, R/2469/76 and R/2673/76; welcomes the Government's intention in respect of R/360/77 to negotiate a settlement which, taking into account the interests of consumers as well as of producers, helps to secure a better balance of the market, particularly in those sectors with a structural surplus; and. In respect of R/2469/76 and R/2673/76, endorses the Government's view that decisions on whether Commission proposals for changes in a member state's representative rate should be accepted are primarily a matter for that member state; further urges the Government to press for easier access into the United Kingdom for efficiently produced foodstuffs from outside the EEC; and opposes the EEC Commission's proposals for exclusive use of butterfat and milk proteins, for a prohibitive levy on the production of isoglucose, and for a tax on vegetables and marine fats and oils.

Orders of the Day — WATER CHARGES EQUALISATION BILL

Not amended (in the Standing Committee), considered.

Clause 1

QUALISATION LEVIES PAYABLE BY CERTAIN WATER AUTHORITIES

11.30 p.m.

Dr. Edmund Marshall: I beg to move Amendment No. 1, in page 1, line 6, leave out "number of premises"and insert" weighted number of hereditaments".

Mr. Deputy Speaker (Mr Bryant Godman Irvine): With this it will be convenient to take the following amendments:
No. 3, in page 2, line 9, at end insert—
'(3) Any reference in this Act to the weighted number of hereditaments in the area of a water authority is a reference to the figure produced by adding together—

(a) the total rateable value of hereditaments in the area of the water authority to which a supply of water is provided by the authority on an unmeasured basis, and
(b) the total number of such hereditaments multiplied by the total rateable value of hereditaments in England and Wales to which a supply of water is provided by water authorities on an unmeasured basis and are divided by the number of such hereditaments in England and Wales'.

No. 4, in page 2, line 16, leave out
the total number of premises
and insert
twice the total rateable value of hereditaments".
No. 5, in page 2, line 26, leave out "number of premises "and insert" weighted number of hereditaments".
No. 8, in Clause 2, page 3, line 7, leave out "number of premises"and insert" weighted number of hereditaments".

Dr. Marshall: These five amendments together make one change in the Bill—namely, a change in the basis on which equalisation is to be operated between the water supply charges levied in different water authority areas of England and Wales. I apologise to the House for the wording of the amendments, particularly

Amendment No. 3, being complex. It is a form of mathematics written in legal language, so it may be of assistance to the House if I explain exactly what the amendments are intended to do.
As the Bill stands at present, the equalisation proposed is based on the actual average payments made by domestic ratepayers for water supply. The overall figure which is used to start the calculation of average payments is the historic debt which was incurred by the water authorities before a specific date. This is then averaged out among all the domestic ratepayers in the water authority area to produce an average payment.
A number of my hon. Friends and I were not satisfied that this was the fairest basis for equalisation. Therefore, in Committee we tabled amendments that had the effect of changing the equalisation scheme from being based on average payments for water supply to being based on average poundages levied by the water authorities for water supply. That group of amendments was discussed in Committee but not accepted. The amendments that we have now tabled on Report are intended to be an exact compromise between what is in the Bill and what would have been effected had the amendments moved in Committee been accepted. In other words, these amendments are a halfway house between equalisation based on the average money payments for water supply and equalisation based on the rate poundages levied by water authorities for domestic water supply in their areas.
Why is it that my hon. Friends and I who have tabled these amendments are not happy with the basis for equalisation that is now proposed in the Bill, the basis of calculating how different regions vary in the average payments that domestic ratepayers are required to make for their water supply? In the first place, it has to be emphasised that the law as it stands requires water authorities to levy water supply charges not in terms of a flat-rate payment which all domestic ratepayers have to make, as an equal payment right through the whole of the water authority area, but in terms of a rate poundage. Therefore, throughout a water authority's area different householders will pay different amounts in water charges because their properties have different rateable values.
Where equalisation has already been started within water authority areas, it is equalisation based on equalising rate poundages, not on equality of payments throughout the area. If Ministers who were saying earlier that one good reason for national equalisation was that equalisation was already taking place within many water authority areas are to be consistent they must accept that equalisation within a water authority area which is based on rate poundages should also be the kind of system applied nationally—in other words, a system of equalisation of rate poundages.
Without amendment, the Bill will be subsidising ratepayers whose properties have high rateable values at the expense of those with low rateable values. Many people pay high water supply charges because they live in big houses. In effect, we shall be asking people in poorer property to subsidise people in larger property. I find it difficult to believe that a Labour Government would press for such a move, asking poorer people to subsidise richer people.

Mr. Robin Maxwell-Hyslop: Would the hon. Gentleman explain the proposition? Since the rateable value of a property is in no way related to the income of the person living in it, why is it the case that a property with a lower rateable value is inhabited by a poorer person? I do not think he has established the connection.

Dr. Marshall: I accept the point completely. I was trying to say that, under the Bill as it stands, we are asking people who live in poorer property to subsidise those who live in more opulent property. I accept that the property is not necessarily related to the financial means of the ratepayer.

Mr. Michael Morris: In what way does the hon. Gentleman relate rateable value to consumption of water? Consumption is the basis of the Act which led to this Bill. One does not necessarily use less water in a smaller house.

Dr. Marshall: That is the next point was going to make. I disagree with the hon. Gentleman's last comment. It seems to me that there is more likelihood of there being more water outlets in a

larger house, with toilets upstairs and downstairs—

Mr. Maxwell-Hyslop: One would not go more often.

Dr. Marshall: —and perhaps two or three bathrooms or showers. There might be two garages for two cars. That would imply greater use of water in washing one's car. A bigger property might have a bigger garden and, therefore, an outside water supply. There might be more people living in a bigger property and, therefore, using more water.
Thus, irrespective of how much water is used, the basis of equalisation proposed in the Bill means asking people in poorer property to subsidise people in richer property. That is totally contrary to what a Labour Government should be attempting to achieve.

Mr. Terence Higgins: The hon. Member's initial explanation was less than clear. He is not distinguishing between the situation in the area that will have the levy raised upon it and the situation in the area receiving the money. Might not a large property be occupied by an elderly couple who, as a result of inflation, may be poor and would be subsidising richer people in the recipient area? The area that would have the levy raised upon it might contain small houses and a large number of better-off people.

Dr. Marshall: The hon. Gentleman has made the same sort of point as was made by the hon. Member for Tiverton (Mr. Maxwell-Hyslop), that there is no relation between the rateable value of a property and the financial resources of the person living in it. It seems strange that by having a system in the Bill of trying to equalise by comparing average payments by ratepayers in each of the water authority areas there will be a large number of people in small houses subsidising people living in larger houses. As a result of the Bill a person living in a colliery village in Yorkshire could be subsidising a person living in a mansion in East Anglia with large rooms, a large garden and many garages.

Mr. David Penhaligon: As last year the average person in the South-West paid £20·70 in water rates and in the Thames area the figure was £13·70, is the hon. Gentleman arguing that incomes


in Devon and Cornwall are currently that much larger than those in the Thames area or that, on average the houses in the South-West are bigger?

Dr. Marshall: If the Bill had been operated this year—although we now understand that that will not be the case—the South-West would have gained about £1·7 million from the common pool. Under my amendment the South-West would gain even more—about £2 million.
One interesting fact is that of the 10 water authority areas in England and Wales seven would gain something as a result of the amendment and only three would not. I leave it to the Minister to tell us which those three are.
The basis of the equalisation proposed in the Bill is rough and ready. It does not contain a really just system. It is something that has been thought up quickly. The real effect of it on people up and down the country has not been properly thought out. I should have preferred the kind of amendment that was proposed in Committee, but I accept that that is not possible. Therefore, the amendments that I am now proposing are exactly a compromise. They are a halfway house between what is in the Bill and what would have been the effects of the amendments proposed in Committee.

11.45 p.m.

The Minister of State, Department of the Environment (Mr. Denis Howell): The description of the amendment as an ingenious attempt by the Yorkshire Water Authority to change the method of calculating unit costs was accurate. I know that many hon. Members have doubts about the wisdom of introducing computers into the water industry, but the Yorkshire Authority must have had access to a computer to deal with this interesting mathematical problem and produce more figures for my hon. Friend the Member for Goole (Dr. Marshall) on the effect of the amendment.
The method that we have adopted for calculating unit costs, which are fundamental to the Bill, is based on the concept of historic debt. It is calculated, under the Bill, by, first, identifying the relevant financing costs of historic debt and, secondly, dividing that figure by the number of properties affected—thereby producing the average unit cost. My hon.

Friend has given a good outline of his proposals, which would involve dividing the first figure not by the number of properties affected but by rateable poundage.
The Bill is a modest measure and is not the appropriate place to try to reform the rating system on water equalisation charges. I do not think that we can even go so far as to try to change the method of water charging. Perhaps we may move away from calculating water charges on rateable value in future, but it would require a great deal of thought and a great deal of consultation with water authorities and local authorities before that could be done.
The House will not be surprised to know that the principal beneficiary of the new proposal is the Yorkshire Water Authority—which is, no doubt, why my hon. Friend produced it.

Dr. Edmund Marshall: Under the amendments, the principal beneficiary will still be Wales.

Mr. Howell: Comparing, pro rata, the situation that by hon. Friend seeks to achieve with the situation in the Bill, I am justified in saying that the principal beneficiary will be the Yorkshire Water Authority. Wales will still benefit considerably, but the turnround will mean that Yorkshire instead of having to pay £1·13 million into the central kitty, would receive £1·21 million. That is a very big change.
It is true that a number of authorities would gain, but the two authorities that would suffer adversely are the Anglian Authority and, even more so, the Thames Authority. The Thames Authority, which under the Bill will pay £3·972 million into the central equalisation fund, would have to pay the astronomical sum of £10·77 million. The proposals emanating from the amendment total £12·43 million.
It is ludicrous that the whole of the water equalisation proposals should be borne mainly by the Thames Authority and also by the Anglian Authority. That is monstrously unfair. Whatever arguments may be deployed about people living in large houses or small ones, or about how many bathrooms are involved, the fact that a sum of £10·77 million is to be imposed on the working population


of London and Anglia is totally unjustified, and the small householders in those areas would regard that as an unreasonable share of the burden. It would bring the whole scheme into contempt. I hope that my hon. Friend will not press his amendment, which is totally unacceptable to the Government.

Mr. Higgins: Will the Minister clarify one point? It is true to say that the whole scheme is held in contempt in many parts of the country. Do the Government expect the Bill to come into operation next year, or will other legislation supersede it?

Mr. Howell: I answered that question in Committee every day for about 10 days, but I shall answer the hon. Gentleman again. This measure will come into effect next year. I hope to introduce a major Bill next year, but since I cannot guarantee that the Opposition will assist in placing that legislation on the statute book, this Bill has to come in at this stage.
There are large-scale beneficiaries under the Bill. One sees the justice of the matter when one examines to wide range of costs which we are seeking to alleviate. It will bring help to people in Wales, the South-West and the counties of Anglia, and particularly to people in Northumberland, Durham and so on. It is wrong that people should have to bear charges of 40 or 46 per cent., which are so excessively above the national average. The main justification for the Bill is to bring the matter down to an acceptable situation. I hope that my hon. Friend will not press the matter.

Amendment negatived.

Mr. Arthur Jones: I beg to move Amendment No. 2, in page 1, line 8, after 'authority', insert
' and other statutory water undertakers '.
This amendment seeks to deal with the question that was left oustanding in Committee—namely, the position of the private water companies. This matter was touched upon in the Second Reading debate on 24th January, at column 1010, when notice was given of the fact that we thought that the private water companies should be included in a scheme of equalisation. This is a matter that we pursued in Committee. The private water companies supply 12 ½ million persons

with water, some 22 per cent. of the total supply, covering 11,000 square miles and 19 per cent. of the area of England and Wales. It seems extraordinary that the private water companies were not included in the equalisation scheme—

Mr. Dennis Canavan: Or nationalised.

Mr. Jones: The hon. Gentleman talks about nationalisation but that is not within the context of the Bill. That is what the Government proposed later. Their timing was wrong. That was their unfortunate experience. We found in Committee that the companies had never been consulted. That was an extraordinary development.
The Minister tried to protect himself by saying that the companies had been consulted, but that was on the consultative document, not on the proposals in the Bill. Perhaps there was a misunderstanding when we discussed the matter in Committee but, clearly, the out-turn was that the private companies had never been asked for their opinion on the Bill's contents. Indeed, they have never been consulted althought they are major suppliers. As I have said, they supply 22 per cent. of the total supply. The Minister expected the companies to say that they did not want to be included. The right hon. Gentleman said that that is what they did say.

Mr. Howell: Initially.

Mr. Jones: The right hon. Gentleman is talking about the consultations under the consultative document. He is not talking about the Bill's contents. In that context the companies were not consulted. The right hon. Gentleman confirmed that. His exact phrase in Committee was "Certainly not".

Mr. Canavan: Why do the so-called private water companies have the right to be consulted? If we believe in God, the water comes from God. If we do not believe in God, the water comes from the sky. By what right does it belong to these silly private companies? What right do they have to be consulted by a democratically elected Socialist Government?

Mr. Jones: The hon. Gentleman is entering into some sort of philosophical argument. His remarks could equally have been directed to the Government


Front Bench when referring to interference with the natural supply of resources.
In Committee the Minister said that the private companies had not been consulted. In column 307 he said that he would be happy to talk to the companies about the matter. Since then we understand that negotiations have been taking place. At the conclusion of our proceedings on the morning of 17th February the right hon. Gentleman said:
While we have been having these exciting discussions"—
I do not know why he should get excited about them—
this morning I authorised my officials to make contact with the appropriate water companies and I can inform the Committee that we have arranged a meeting for Monday next.
He said later:
I shall report at a later stage how the discussions have progressed".—[Official Report, Standing Committee B, 17th February 1977; c. 318.]
I understand that there have been meetings fairly recently. I understand that there was a meeting on 15th March. The right hon. Gentleman will be able to give us an up-to-date report on what has been taking place with the companies. I understand that there is a difficulty and that a major point is at issue between those who are acting for the private companies' association and the Department. That concerns the question of depreciation. It will be interesting to hear about the progress of those discussions. This amendment was put down for the purpose of ascertaining what progress has been made in that respect.

12 midnight.

The Under-Secretary of State for Wales (Mr. Alec Jones): I take the point that this is basically a probing amendment to ascertain how the discussions are progressing. Doubt was expressed in Committee whether the water companies wanted to come into the scheme and whether they had been consulted. My right hon. Friend made it clear that he had consulted the water companies on the consultative document. The hon. Member for Daventry (Mr. Jones) at least conceded that point.
The fact is that the scheme outlined in the Bill is basically the scheme which was outlined in the consultative document.

The views expressed by the water companies, which my right hon. Friend repeated in Committee on 17th February, were that they were not very keen on this kind of scheme. Therefore, it was reasonable to assume that if they were not very keen on the scheme in the consultative document, they would not be keen on a near-identical scheme in the Bill. In those circumstances, it is unfair to pursue the argument whether the water companies were consulted.
In Committee my right hon. Friend agreed that if it was possible to bring in the water companies he would like to do so and would set about instituting discussions to see whether that could be done.
The hon. Member for Daventry knows that meetings have taken place. The latest meeting was held yesterday, as he correctly said. These meetings will have to continue. All that I can say at the moment is that yesterday's meeting was reasonably satisfactory. However, it is not possible at this stage to give a firm undertaking whether it will prove to be possible to bring the companies into the scheme. Some of the practical and legal difficulties now look capable of solution, but serious problems still remain to be ironed out.
At the end of the day, whether the water companies are brought into the scheme will depend on our being able to clear the technical difficulties and being sure that, as a result of bringing them in, we achieve a degree of equalisation which is important to our future water supplies.
I repeat the undertaking that was given in Committee that if it proves practicable to adapt the scheme to the companies in such a way as to continue to equalise the Government will consider moving amendments in another place.
I cannot go any further than that. We are continuing our discussions. We are somewhat more hopeful than we were, but it is still too early to say what the result of the discussions will be. Those discussions are continuing and are hopeful and helpful. I trust that the hon. Gentleman will not, therefore, press the amendment.

Mr. Arthur Jones: I am grateful to the Minister for that updating of the circumstances. I welcome the assurance that,


if it is possible and practicable, the Government intend to incorporate the private water companies within the scheme. I am sure that hon. Members on both sides of the House recognise that it is desirable that they should be incorporated. The private water companies are agreeable and are co-operating with the Department in an endeavour to find ways and means by which it can be done.

Mr. Robin Hodgson: I rise to support the amendment because if it is not carried it strikes at the heart of what the Government are claiming to try to carry out in the Bill.
I quote the words of the Minister when moving the Second Reading of the Bill. He said in Column No. 989:
The Bill is based upon the need for more equitable charges, without which it would be extremely difficult if not impossible to develop a national strategy for water and the national ownership of water as forecast in the Green Paper published last year.
Leaving aside whether such a national strategy or, indeed, equalisation of charges is desirable or possible, I think this is a bad Bill. It is full of muddled thinking, chiefly because it confuses income items with capital items instead of concentrating on the need for realistic compensation, certainly for the people of Wales, whose land has been compulsorily purchased. Instead the Bill submerges the whole question in a tide of pseudo-egalitarianclauses.
However, the Minister used the words
the need for more equitable charges".
The practical result for the West Midlands will be that in equalities will be increased. In my own constituency, and in the area round about, consumers receive their water from two sources, either from the Severn-Trent Water Authority or from the South Staffs Water Works Company. The Severn-Trent Water Authority falls within the Bill but the South Staffs Water Company does not. We shall, therefore, have the ridiculous situation that people on one side of the street are paying an increased levy while people on the other side of the street are not.
I quote again from what the Minister said:
There is another reason why the Government have thought it right to proceed in this matter. On the day that the 1973 Act became law we had not only 10 regional water authorities

but almost 200 different water charges to domestic households. It was an absolute jungle.
Later he added:
I know that hon. Members possibly have objected to it—we had some objections last year—but the regions certainly cannot object to the principle of equalisation in the regions. The position in my region, which is in the area of the mammoth Severn-Trent Water Authority, raises the question:—
Mr. Canavan: On a point of order, Mr. Deputy Speaker. Is it permitted to read an elongated speech such as this? Surely it is against the Standing Orders of the House, and an abuse of the House, for this man to be reading it.

Mr. Deputy Speaker: The hon. Gentleman, who has been making observations from a sedentary position throughout the evening, is the last person to raise a point of order.

Mr. Canavan: Nevertheless, it is true.

Mr. Hodgson: I am quoting from the Minister in an effort to point out how the amendment will help achieve the objectives set by the Minister on Second Reading. I conclude the quotation:
if it is right to equalise charges between Birmingham and Nottingham, why is it wrong to equalise charges between Birmingham and Cardiff?"—[Official Report. 24th January, 1977; Vol. 924, Cols. 989–993.]
Leaving aside the question of equalisation between Birmingham and Nottingham and Cardiff, the charges are not going to be equalised within Birmingham itself because of the presence of the private water companies. We shall have a situation where inequalities will increase. A large number of people are affected. Within the Severn-Trent area, which the Minister will know well, 83 per cent. of the supplies come from the Authority. Therefore, only 83 per cent. will be facing higher charges. The other 17 per cent., whose supplies come from the water companies, will not be facing any higher charges. In an area where there are millions of consumers, 17 per cent. represents several hundred thousand people.
I draw the Minister's attention to a further defect which arises from treating statutory water undertakings on a different basis from the regional water authorities. The private water companies act as the authorities' agents for the supply of water in their areas. The regional


water authority is responsible for the control and development of the water resources of the region, including those on which the companies depend. In other words, the strategic plan for the region covered by the regional water authority will be affected by the equalisation levy, but the tactical supply of specific areas covered by statutory water undertakings will not be affected.
In conclusion, the Government have claimed that by the Bill they seek to equalise water charges, but unless the amendment is carried they will fail dismally to do so. Instead of disparities between regions, there will be disparities between streets because of the differences in sources of supply. Instead of co-ordinating and balancing the supply of water at the strategic or regional level, there will be the invidious effect that tactical or local water supplies will not be affected, thus enabling those undertakings to get cheaper water without charging the customers on the basis that the Minister has laid down. This cannot be sensible. It cannot be fair to different classes of consumers living in entirely different geographical situations. That is why I support the amendment.

Mr. Arthur Jones: I am grateful to my hon. Friend the Member for Walsall, North (Mr. Hodgson) for stating that issue of the Bill so clearly. [HON. MEMBERS: "What about asking for leave?"] By leave of the House, Mr. Deputy Speaker—

Hon. Members: No.

Mr. Deputy Speaker: An hon. Member does not need the leave of the House to speak again on Report.

Mr. Jones: Thank you, Mr. Deputy Speaker. I thought that false voices were giving me counsel. How right I was to think that that was so.
I was saying that I am grateful to my hon. Friend the Member for Walsall, North for putting so clearly the points that have been discussed on a number of previous occasions. We would have benefited greatly if he had been with us in Committee. I am sure that the Minister would have been glad of his assistance. He is always one to admire straightforward advocacy and the presentation of a case in as succinct a manner as possible.
I shall not let this occasion pass without correcting the Minister about the question of consultation with the private water companies. He cannot get away with what he said. I shall now take up the question that I put to the right hon. Gentleman on 17th February—
was the Water Companies Association consulted on the Government's proposals in the Bill?
The right hon. Gentleman replied:
Certainly not."—[Official Report, Standing Committee B, 17th February 1977; c. 278.]
That is conclusive evidence that in fact the Water Companies Association was not consulted about the terms of the Bill. It is no use those on the Government Front Bench trying to hedge on that as they did in Committee. The facts are there perfectly clearly, and the right hon. Gentleman was correct to make that statement.
There is nothing to be gained now in regard to the position of the private water companies. Clearly, the advice that the Opposition have given the Government in this respect has been accepted by both the Government and the private water companies and I think there is a willingness on both sides to search for ways and means by which the private water companies can be brought within the proposals in this equalisation measure. In those circumstances, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Arthur Jones: I beg leave to move Amendment No. 6, in page 2, line 30, at end insert:
(2) Provision for depreciation shall be subject to a direction by the Secretary of State after consultation with the Water Council and shall be calculated on a uniform basis as between both the water authorities and the statutory undertakers.'
This amendment relates to another question which was left very much in the air and was most inadequately dealt with in Committee. I know that it is an involved question—[HON. MEMBERS: "Hear, hear."—which is perhaps beyond the ability of some to follow. Those of us who have attempted to do so have tried to bring our judgment to bear on it. We hope to carry others with us, if there is a willingness to follow the argument. Of course, there may not be such a willingness.
Evidence has been presented to the Government on several occasions about the inclusion of the domestic element of rate support grant arrangements for the higher level of water charges in Wales. That is something the right hon. Gentleman has denied, and although evidence is continually being presented to him we still get a negative response. Time and time again he and his colleagues have said that there was no relation between the rate support grant domestic element and—

12.15 a.m.

Mr. Denis Howell: On a point of order, Mr. Deputy Speaker. Could I draw your attention and that of the hon. Gentleman to the fact that he is addressing himself to the next amendment, and not Amendment No. 6. This amendment is about depreciation, and not the rate support grant.

Mr. Jones: But I think that the rate support grant arrangements are tied up with depreciation. It will be interesting to hear the Minister deny that, as he has denied so many other things in the past. When it comes to the domestic element of the rate support grant I Jo not put any denial past him. I have heard him say on previoust occasions from the Dispatch Box that he did not understand it. I do not think he is alone in that.
On Amendment No. 6 and the question of depreciation, this matter was discussed at length, and my hon. Friend the Member for Worthing (Mr. Higgins) dealt with the question of historic values, investment values and capital resources available to the companies. We tried to persuade the Minister that there were better ways and means of ensuring equalisation by dealing with depreciation charges on a common basis. This flows from the problems that the private water companies are experiencing. We hoped that the Minister would find it possible not to leave the options as far open as they are to the Secretary of State, but that there would be requirements placed en both the regional water authorities and the private water companies for some common policies on depreciation. It is difficult to understand why that has not been done.
It is reflected generally in the terms of the Bill that a great deal of latitude is left to the Secretary of State to make

adjudications that may be inescapable because of the complexities. Some of us share the view that this legislation was rather hurriedly introduced, and perhaps it did not get the careful thought due to such a complicated measure. But I hope that there may be some movement in the Department on these difficult and involved financial calculations.
At the end of the day they are mainly book-keeping entries but they do help significantly in administrative terms. The private water companies and the regional water authorities will know much better where they are placed if definite guidelines and requirements are laid down for accountancy purposes. I hope that the Minister will move towards this to some extent.

Mr. Denis Howell: I am glad that we got the hon. Member for Daventry (Mr. Jones) back on the right lines before he had gone too far.
This is an involved matter. The method by which depreciation is calculated, both by regional water authorities and by private companies, is different in almost every case. This has arisen because their historic debt commitments and their methods of accountancy are different in almost every case, although since the passing of the Act and the establishment of the regional authorities there is far more common ground than there used to be.
We discussed this involved technical question in Committee, when a similar amendment was not carried. As I said then, the suggestion of common depreciation practice had been examined. There is nothing hurried about this Bill. It follows a working party of officials which sat for one year and a ministerial working party which sat for almost a year. It has been extremely well thought out. But, because it is so involved, I do not claim that there is in every clause the crystal clarity that one likes to see.
Nevertheless, when we consulted the water authorities some said that they would like to see a common depreciation practice but more were against the idea, for reasons which I have given. Since equalisation is intended to equalise, it is important that the scheme should operate on real factors—the real historic debt—rather than on notional factors. The water authorities have not managed to agree,


and with 10 separate water authorities there seems to be merit in not asking them all to agree, to absolute uniformity in their accountancy practices.
We see no reason to curtail inter-authority discussion of the matter by imposing standard financial practice at this stage, especially as equalisation transfers in the Bill will account for less than 2 per cent. of the authorities' total revenue. It is important, however, for the future to prevent water authorities adjusting their depreciation factors. It is important, as we are equalising from a certain date, that we freeze whatever are the existing accountancy practices in relation to depreciation. Therefore, we are taking power in the Bill to ensure that the Secretary of State can do just that. In other words, no one will be able to adjust his accountancy practice to gain benefit from the terms of the Bill, for that wound be fundamentally wrong.

Mr. Hodgson: The right hon. Gentleman talks about the need to freeze accountancy practices for depreciation, but is it not possible that each water authority will then adopt capital expenditure plans to benefit from the freezing of accountancy practices?

Mr. Howell: The hon. Member for Walsall, North (Mr. Hodgson), whom we welcome to our deliberations, is an extraordinary Member. He has great courage. He is, I think, the first Member for a long time to urge the Government to impose increased charges on his constituents. He did so in his speech on the last amendment, when he said that 17 per cent. of the people in the Severn-Trent Water Authority's area are not being asked to make a contribution. A large number of them are his constituents. As I spent some time there listening to his election campaign—he was elected on the issue of increasing prices—I find his interventions this evening remarkable, to say the least. However, the House does strange things to new Members, and we take note of the effect on him.
The short answer to the hon. Gentleman is that it would be ludicrous to suggest that a regional water authority would adjust its large capital programme to take advantage of the very small benefit

which this equalisation measure would give. I do not think that that is a reasonable proposition.
Let me now say a word about the water companies, because they are involved in the amendment. We had discussions with the water companies last week. The House has heard that on the whole those talks went better than we thought they would, but there are still formidable difficulties. One of the difficulties, which has obviously come to the fore, is that the depreciation practices of the private companies are almost all different from those of the regional water authorities. Therefore, if they are to come under the Bill, to equate their depreciation practices with those of the authorities is one of the continuing difficulties that we shall have to examine, and that we are doing.
For that reason, if for no other, it is not possible to proceed with this amendment this evening. But I repeat the assurance that if the discussions reach a satisfactorily mutually acceptable conclusion we shall seek to achieve the objective in another place.

Mr. Canavan: I rise briefly to support my right hon. Friend in opposing the amendment for several reasons. First, I think that the amendment is clearly designed to extend the interests of the private water companies. I am shocked to hear that there is still such a thing as a private water company. Water is such a basic natural resource and is so essential to humanity that it shocks me to think that in this day and age there should be such a thing as a private water company.
May I also ask my right hon. Friend in his capacity as Minister for Sport please to ban the Scotland versus Chile football match, and please to give me at least two tickets for the Scotland versus England international at Wembley?

Mr. Arthur Jones: I think that I sense a little special pleading in the contribution by the hon. Member for West Stirlingshire (Mr. Canavan).
I take the point that the Minister has kindly made about depreciation allowances. I am interested to hear from him about the wide variety of mechanisms that exists within the private water companies, and I agree that it makes this matter more difficult. I would have thought,


however, that these practices were mainly book-keeping entries, and that they could all be brought into line.
Fortunately for the Minister, he has months ahead of him in which to make the necessary dispositions and inquiries. I hope that the intervening period will be put to good use. I accept his assurance, and I therefore beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2

EQUALISATION PAYMENTS TO BE MADE TO CERTAIN WATER AUTHORITIES

Mr. Arthur Jones: I beg to move Amendment No. 7, in page 2, line 41 at end insert—
'(2) Subject to section 3(3) below, in giving a direction under this section for any year the Secretary of State shall have regard to any allowance made under the domestic element of the Rate Support Grant calculations in respect of the level of water charges.'
This amendment deals with the question of the domestic element of the rate support grant calculations. It is something that we have talked about a great deal in Committee. We talked about it during the Second Reading, but, unfortunately, we failed to find it possible to come to any agreement on the subject. In spite of the substantial evidence that was enjoined in our advocacy, Ministers were adamant. One suspects that their attitude was directed not to the question but rather to trying to avoid it.
The purpose of the amendment is to ensure that it cannot and should not be avoided. It would be tedious to go over all the evidence now. But we must deal with one or two of the pieces of evidence concerning that fact that in the domestic element of the rate support grant there is a considerable factor which has regard to the costs of local government reorganisation and the level of water charges in Wales. The Government have been unable to accept this, but it appears in the House, in Government publications and in local authority material time and time again. It is necessary to go through some of the evidence and see whether the Government maintain their position.
12.30 a.m.
On 22nd January 1974 the Conservative Government published a White Paper, "The Rate Support Grant 1974–75", Cmnd. 5532, setting out their intentions
to use this power to protect domestic ratepayers against exceptional increases in rates arising from changes in grants and from exceptional increases in charges for water and sewerage services arising from the reorganisation of those services.
In February there was a change of Government, but the Rate Support Grant Order 1974 was laid before the House on 14th March and was debated on 25th March. A number of references to this factor in the domestic element were made in that debate.
In reply to a Written Question, the late Mr. Anthony Crosland said on 15th March 1974:
I propose therefore to maintain the total amount of grant previously proposed and the division of grant as between needs, resources and domestic elements."—[Official Report, 15th March 1974; Vol. 870, c. 12.]
That was in confirmation of the policies followed by the previous Government.
On 8th May, in an oral answer, Mr. Crosland said:
We took the view that much of Wales had been affected far more seriously than other areas by the application of changes in local government and by reorganisation of finance and water and sewerage services. Lest there is a misunderstanding, I should point out that, even with the uniform domestic relief for Wales, some districts in Wales will lose out as a result of our decision."—[Official Report, 8th May 1974; Vol. 873, c. 372.]
There again we have confirmation that in the domestic element of the rate support grant calculations the special position of Wales with regard to local government reorganisation and the level of water charges in the Principality were taken into account when the grant calculations were made. I am talking about 1974, but there have been no changes since. The Government have never said that they are no longer having regard to the domestic element and the differing figures that were allowed.
In the Rate Support Grant (No. 2) Order 1974, which came before the House later that year, the domestic element again refers to the reorganisation of local government and water services. It is difficult to think that no regard is now paid in the domestic element of the rate support grant to those earlier allowances. In fact, the calculations have not changed.


They are still relevant for next year. Here I call in aid the Daniel Report, which refers in paragraph 5.8 to the reorganisation of local government and water services.
The domestic element for 1974–75 allowed 33·5p for Wales and 13p for England. Again there was discrimination in favour of Wales. In the current year, and I understand for next year, the figures have been altered to benefit Wales-36p for Wales, which is a narrowing of the margin, and 18·5p for England. There is a mass of evidence to support the contention that in dealing with the rate support grant for Welsh local authorities regard is being paid to the increase in water charges.
The purpose of the amendment is to ask the Government to consider whether it would be fairer to have regard in any equalisation programme to that factor in the domestic element of the rate support grant. We might be told that the amendment is not drawn correctly or not correctly worded. I take responsibility for that. The purpose is to clear up the unsatisfactory debate that we have had on the rate support grant and to narrow the gulf between the Government and the Opposition and that between the Government and all the well-informed sources that have been consulted. It will be interesting to hear what the Government have to say and to what extent they are prepared to accept my argument.

Mr. Alec Jones: I agree that we heard a great deal about the subject in Committee. For several sittings I thought that we would hear of nothing else. I do not object to that; nor do I object to the hon. Member for Daventry (Mr. Jones) raising the issue tonight.
The hon. Member said that there was substantial evidence to support his claim, but there are different views about what is right and what is wrong on the issue. The hon. Member referred to his own Government's White Paper and to statements made by my late right hon. Friend, Mr. Tony Crosland. His quotations from the Daniel Report referred to the situation that existed in 1974–75. I do not expect that at the end of my speech we shall be any nearer an agreement, but in the exceptional circumstances of the year 1974–75, when the rate support

grant settlement was made within days of a Government taking office, we had experienced the reorganisation of local government and of the water authorities. An element of additional relief was given to the Welsh authorities to compensate them because the effects for them were greater than those for England.
The situation did not remain there. The differential between the domestic relief in England and in Wales was narrowed in the following year—as the hon. Member conceded. Because the rate support grant settlement is a decision made by Government after consultations with the local authority organisations, the Government are in the strongest and best position to say what they included and took into account.
In the settlements for 1976–77 and for 1977–78 there is no question of water charges being taken into account by the Government in their decisions about the levels of domestic relief. Those decisions that were taken for the years 1976–77 and 1977–78 were based solely on the likely effects of changes in the levels of relief on local authority domestic rate pound-ages and had no relevance whatsoever to the level of water charges in Wales or in any other part of the United Kingdom. They had no connection with them.
I can only repeat the point that I made in Committee. However much one sought to alter the level of rate support grant, it would not affect the level of water charges. The Bill is about a partial equalisation of water charges. We know that it is a modest scheme, and it is a limited scheme even in its expectations of life. By its very nature, it could not take into account those other factors.
Therefore, although I am sure that the hon. Gentleman will not agree with me, I assure him that the water charges are not taken into account and were not a factor in deciding the level of the domestic element.

Mr. Arthur Jones: I am grateful to the hon. Gentleman for dealing with the question at such length. I think that he knows as well as I do that the view that he is expressing is not one that is held by the local authority associations, certainly not those which I have consulted, and some of those who are on the consultative committee do not agree with the


views that the hon. Gentleman has now put before us.
Will the hon. Gentleman be kind enough to consider whether an explanation could be made available, or a memorandum setting out the factors that he has put before us tonight, having regard to the circumstances in 1974–75 and the changed circumstances, as he says, of the current financial rate support grant domestic element arrangements and those for next year? As there is so much misunderstanding on the subject, I invite the hon. Gentleman to consider whether, for the benefit of everyone, it would not be a bad idea to prepare a memorandum. It would, perhaps, help the consultative committee when it comes to consider with the Government the arrangements for subsequent years.
This is a matter that needs to be resolved. I think that the Government realise that; certainly the hon. Gentleman does. Will he give an undertaking that a memorandum would be appropriate in the circumstances of the disagreement between the two Front Benches, to set the thing out so that we can all get the benefit of it?

Mr. Alec Jones: I do not completely rule out the idea of a document of the nature that the hon. Gentleman suggests. However, in Committee and again tonight, I thought that I had spelled out fairly clearly, though not at great length, the Government's view on this matter. I am sure that the local authority associations that the hon. Gentleman consults and those that consult me are fully aware of what was said in Committee and that they will read what has been said in the debates tonight. However, I shall certainly look at the idea of making some communication with the organisations concerned, but I could not give a firm commitment to a detailed memorandum on the matter. The facts are available and can be read by anyone who is interested.

12.45 a.m.

Mr. Arthur Jones: There is so much in dispute. That is the point. I have taken great trouble on this matter. I have tried to understand it. The rate support grant is terribly complicated. On a significant factor of this description in the domestic element, the views expressed by the two Government spokesmen are in great contradiction

to the evidence in the documentation to which I have referred. I know that what has been said can be read, but what is required is documentary evidence of what has taken place and the thinking that goes on behind the domestic element arrangements. Then all of us can be fully informed.
I shall not presume further now but I shall not leave the matter there. Unless something is forthcoming, I shall try to clear up the unsatisfactory situation revealed by what Ministers have said and what my inquiries have revealed.
I am not making a judgment for myself on this. My case rests on the material supplied to me and the quotations on which I have drawn. The Minister is not committed—I would not expect him to be—but I ask him to convince me that he is right. On that partial understanding, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Motion made, and Question proposed, That the Bill be now read the Third time.

12.46 a.m.

Mr. Stephen Ross: I could not let the Third Reading be agreed to without a protest on behalf of my constituents. Although the Bill may have some moral basis, its timing is extremely bad. People in the Southern Water Authority's region—especially my constituents—have had to face substantial increases this financial year because of equalisation throughout the region. The additional burden of these charges is too much to bear.
If the Government had done something to stop the Southern Water Authority imposing its own equalisation so quickly—it was supposed to be done over five years and it was done over two—I might have taken a different view. The Southern Water Authority has been a disaster for my constituents. We were perfectly happy under our own Isle of Wight River and Water Authority—[Interruption.] Despite the grumblings of the hon. Member for West Stirlingshire (Mr. Canavan) who knows nothing about the matter, we have gained little, if anything, from being in that authority's region. If anyone else is game to go into the Lobby against the Third Reading, I shall be pleased to join


him. If not, at least I have made my protest.

12.48 a.m.

Mr. Michael Morris: As the Minister knows, I have supported the principle of the Bill from the start—

Mr. Canavan: The hon. Member does not need to say anything, then.

Mr. Morris: If the hon. Member wants to dry out, I suggest that he goes elsewhere.
I am disappointed about one thing. Most of the groundwork for the Bill was done during the summer and early autumn by the working party. I understand that even if the Bill goes through the other place successfully, it will be enacted too late to be implemented in the coming financial year. That will severely affect the areas which stand to benefit most from the Bill—the South-West, Wales and East Anglia. These are the areas which suffered most from the drought and the reorganisation and which have always suffered from difficulties of water supply.
We deprecate the loss of a year's equalisation. If there is to be a delay, perhaps the Minister would consider a partial equalisation to start at the midyear point rather than having to wait another year. I think that the Minister has succumbed too readily to the blandishments of the Thames and Southern Water Authorities, which appear to have delayed the whole thing for another year.

12.50 a.m.

Mr. D. E. Thomas: I intervene briefly to express my concern that, although the Bill is a response to the public outcry in Wales and the areas of other authorities that suffered substantial increases in 1974 and 1975, it has been so delayed that it will not benefit them in the coming financial year. I still do not understand precisely why it cannot be implemented and I hope that the Minister will give us a full explanation. If the Bill has a Third Reading now and goes through another place rapidly—and I understand that the billing by water authorities does not take place until May—I fail to see why it would not be possible to implement the Bill and to have, if not full, at least part

equalisation during the coming financial year.
I am concerned that the fact that the Bill will not be implemented this year will mean a £3 million loss to ratepayers in Wales. I am also concerned that having seen two major reports on the issue—the Daniel Report and that of the working party—the Government took so long to prepare legislation and to bring it before the House.
In Committee my hon. Friend the Member for Caernarvon (Mr. Wigley) raised the matter of industrial equalisation. We consider this to be of major importance to industry in Wales and we are not satisfied that the Bill—although it is limited in scope—should not have contained proposals for industrial as well as domestic equalisation. We hope that the next major Bill on the issue—and we are apparently to be offered such a Bill—will include such a provision.
We still think that it would have been simpler to adopt the programme that we have advocated for many years—that the Welsh water authority should be empowered to make a clear economic charge for the transfer of water resources from Wales.

12.52 a.m.

Mr. Wyn Roberts: The Minister called this a modest Bill. It is certainly not much of a Bill by any standards and we are surprised to see it presented for Third Reading in view of the Government's declared intention of introducing another and more comprehensive measure before long. Perhaps it is the imminence of the Government's loss of office that has persuaded them that the Bill is worth preserving despite its deficiencies.
My first criticism of the Bill is that it does not live up to its title. It does not fully equalise water charges as the title suggests. It equalises them only partly. Had the Bill come into operation next month, the highest average domestic bills would still have been payable in the Welsh and South-West water authority areas. The lowest Bills would still have been payable in the North-West and Thames Water Authority areas.
It is true that the range of average domestic bills would have been narrowed and that the gap between the highest and lowest bills would have been reduced


from £11·70 to £7·35. That would have been the value of the Bill had it been introduced in time to take effect this coming year, and that is the extent of the equalisation that it introduces.
The most glaring defect of the measure is undoubtedly the one that has been pointed out by my hon. Friend the Member for Walsall, North (Mr. Hodgson). namely, that the Bill does not cover the unmeasured consumers supplied by private water companies. They account for nearly a quarter of all unmeasured consumers in England and Wales. However, the Minister is looking into that matter and seeking to bring in the private companies, so we cannot be too hard on him.
Since Thames will be the largest contributor to the levy pool and Wales will be the largest beneficiary, it is tempting to attack the Bill—as the right hon. Member for Bermondsey (Mr. Mellish) did in an intervention during my Second Reading speech—by asking how one could possibly justify London subsidising Welsh consumers. We have tended to forget that Anglia is also a considerable beneficiary and it could be argued that the Thames levy will go to that area, while receipts in Wales will be made up of levies from Severn and Trent and the North-West, which will total more than £2 million. These areas are supplied with water from Wales and I argued in Committee that if Welsh charges for transferred water had been higher, the water charges to Welsh consumers would not be so high and there might not have been so much need for the Bill. This would still have left the South-West with abysmally high charges, but they might have been alleviated by Exchequer subsidy, as some of my hon. Friends have suggested.
The Government have seriously mishandled the Bill. They introduced it too late for it to become effective this year. The more we look into it, the more doubtful we become about whether it was ever the Government's intention that the Bill should come into effect this year. My hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) was adamant on this point as early as the second sitting of the Committee. My hon. Friend said:
The Minister must know that it is not possible, in the circumstances, for the Bill to come into effect in April. This is nothing

to do with the Committee. Even if the Committee were to close up shop now, there would be no way in which that could be done."—[Official Report, Standing Committee B, 3rd February 1977, c. 60.]
What has been disgraceful is the ununconscionable way in which the Government have sought to blame the Opposition for their own dilatoriness. I am not referring so much to the Minister of State at the Department of the Environment as to the right hon. and learned Gentleman the Secretary of State for Wales, who appears to have briefed the Lobby correspondent of the Liverpool Daily Post on 17th February—the day on which the Minister announced that it was too late for the Bill to become effective this year. The following morning's paper contained an article which said:
Welsh Secretary Mr. John Morris last night put the blame on the Tories—and accused them of deliberately holding up the Water Charges Bill".
Later in the same article we read:
Mr. Morris scored a personal triumph by persuading his Cabinet colleagues to include the legislation in this year's congested programme.
If the right hon. and learned Gentleman scored a personal triumph in Cabinet, there must have been some opposition to him and it is clear that the opposition succeeded in delaying the presentation of the Bill for Second Reading until 24th January. [Interruption.]

Mr. Deputy Speaker: Order. Observations from a sedentary position by hon. Members on the Government Front Bench are particularly deprecated.

Mr. Roberts: The Committee stage began on 1st February and by 17th February the Government were glad to announce that it was too late for the Bill to become effective this year. That is the truth of the matter. The Government have been in no hurry to get the Bill on to the statute book. As a number of us forecast on Second Reading, the House is divided on the Bill according to constituency interest. Those who stand to gain are for it and those who stand to lose are opposed to it—though there are some who rise above such mundane considerations and take a national view.
Welsh Conservative Members said that we were in favour of part equalisation when the consultative document first


appeared. That seemed to us to he an extension of the principle of equalisation already operating within individual authority areas. We were also for partial equalisation because it was a measure designed to reduce our very high water charges in Wales, and it was bound to command our support. Others in the House who have not suffered rising water charges to anything like the same extent as we have can only imagine the desperate situation in which we have found ourselves in recent years. Therefore, any alleviation provided by the Bill will be welcome.

1.1 a.m.

Mr. Denis Howell: I shall immediately take up the point made by the hon. Member for Conway (Mr. Roberts). I wish to mention the procrastination that occurred in Committee, leading to the regrettable fact that we cannot implement the Bill in time for 1st April this year. It does not lie in the hon. Gentleman's mouth to complain about the Bill not being applicable this year or any other year.
Rarely have I heard a speech of greater humbug than that delivered by the hon. Gentleman. At the conclusion of eight sittings on Clause 1, the hon. Gentleman voted against that clause because he said that it could still be defective. If that was an attempt at intellectual gymnastics, it was totally unconvincing. The hon. Gentleman voted for Clause 1—which is the body of the Bill—on Second Reading and, for some reason, then voted against the clause in Committee.

Mr. Wyn Roberts: The Minister knows as well as I do that Clause 1 was imperfect at that stage, and is still imperfect. It has to be amended to include private water companies.

Mr. Howell: That is an even more astonishing assertion. If this Bill requires to be amended in another place to include the private water companies, it will he so amended. I gave the undertaking in Committee which I give again this evening. Both undertakings were accepted by the hon. Member for Daventry (Mr. Jones), speaking for the Official Opposition, but they were not accepted apparently by the second Opposition spokesman

on this Bill, the hon. Member for Conway, who represents Wales. That is the most extraordinary gymnastic performance I have seen in a long time, and if the hon. Gentleman wishes to change his vocation, I shall be glad to offer him a scholarship in gymnastics at one of my sports centres, where he would be better qualified to participate.
I should like to deal with the matter of delay. We spent 20 hours in Committee discussing one clause. I have admitted that the Bill was introduced into this House later than I had hoped, and it was due for Second Reading on the day the House adjourned out of respect for a former Prime Minister—which delayed the matter for several more days. That made the timetable difficult. Nevertheless, in our view it would have been reasonable to have got that Bill through Committee in four sittings. But to have eight sittings and to spend 20 hours on one clause was quite ridiculous.
I said in Committee that I had told local authorities that they could not expect to hold up their accountancy arrangements, their computer operations and their billing for too long, and that we wanted the Bill by 1st April. When the point was reached when I felt in fairness to the authorities' accountancy and administration procedures that it was impossible to hold out hope of getting the Bill for this year, I made an announcement to that effect. In one sitting we dealt with the next five clauses. If ever there was a give-away of the Opposition's attitude in Committee, it was that. After eight sittings and 20 hours on one clause they succeeded in delaying the implementation of the Bill for 12 months. After that the rest of the Bill was dealt with in one sitting. Their change of attitude was extraordinarily revealing.

Mr. Michael Morris: I was not a member of the Committee but I am sure that my right hon. and hon. Friends did a genuine job of exhaustively examining the pros and cons of Clause 1, as is the role and duty of an Opposition. The right hon. Gentleman has said that there comes a point when the local authorities cannot be held up. Is he not aware of the Daymond case, which took place in the not too distant past, when there was a redistribution between ratepapers that was retrospective? There have been cases in the past when local authorities


have been warned about legislation that has been passing through the House when the Government have had the majority to see it through and when it was within the powers of the Government to tell the local authorities—

Mr. Alec Jones: indicated dissent.

Mr. Morris: It is no good the hon. Gentleman shaking his head. It is still within the powers of the Government to tell local authorities that they can make this amendment. Why will he not do that?

Mr. Howell: I am afraid that the hon. Gentleman is not as conversant with the Bill's provisions as I thought. It is clear from the provisions that the Secretary of State has to determine the matter in advance of the year and make a decision in advance of the year. The Bill does not allow him any degree of retrospection. It is not usual in our procedures to allow for retrospection. The retrospection in the Daymond case came about only because of a decision by the Law Lords with which we had to deal. They declared that the law was different from what we believed it to be. That is quite different from passing an Act of Parliament and allowing for retrospection.
I understand that the hon. Member for Isle of Wight (Mr. Ross) saw fit to complain about the effect of regional equalisation. At the time that the Water Act passed through the House, the hon. Gentleman and I, as well as others, pointed out the effect of regional equalisation. Therefore, the hon. Gentleman is entitled to make his complaint. With the industry operating on a regional basis, wide discrepancies among domestic users became apparent, from 46 per cent. above the national average in Wales and the South-West and slightly less than that in Norfolk, Suffolk, Northumberland and Durham to 18 per cent. below. We took the view that that was an impossibly wide variation of charges for an essential commodity. The Bill reduces that variation to 28 per cent. above and 12 per cent. below.
In response to the intervention of the hon. Member for Merioneth (Mr. Thomas) I stress that two things go side by side in respect of the Bill. The country as a whole, particularly the receiving water authority areas, except places such as

Wales, which supplies so much of the water to England, should not make a profit out of water transactions. The proposition in the Bill that I set out on Second Reading is accepted, namely, that all such water transfers should be on a non-profit-no-loss basis. If that is essential for the future safeguarding of supplies, especially to the Severn-Trent Authority, the East Midlands and Lancashire, and possibly in future to the Thames Authority, if it is important to give a guarantee to water consumers in the Midlands, Lancashire and London that there will be no profit made out of future water transfers, it seems that there is a moral obligation upon us all to help people in Wales, the West Country and Anglia suffering under the present pricing arrangements and to give them the degree of equity which the bill seeks to bring about.

Mr. D. E. Thomas: Does the Minister accept that if the transfer of resource takes place on a no-profit-no-loss basis, that is a powerful moral argument for total equalisation?

Mr. Howell: That may come in future. I should not dispute that. The hon. Gentleman and his hon. Friends make a great mistake when they seek to impose a solution on water charging the result of which would be that Wales would make a profit from the water that it sold to England. In Committee I said that the result of that kind of propaganda was already being felt. People in the Severn-Trent and in the North-West authorities are already saying "Why should we make massive investments in Wales if that is what the Welsh nationalists want and what a Welsh Assembly might do at some distant time? We shall therefore build our reservoirs in England."
I remind the hon. Gentleman that England is the drainage authority for Wales. All the rivers in Wales flow into England. The Severn and the Wye flow from Wales into England. Therefore, the Severn-Trent and Conservative voices in other authorities are now beginning to say "Let us not put the investment in Wales. Let us put it in England." Therefore, the danger in what the Welsh nationalists and others in Wales are saying is that the Principality would be denied—

Mr. Deputy Speaker: Order. I am not aware that there is anything about the Welsh nationalists in the Bill.

Mr. Howell: I am aware that they are present in this House making their case. Therefore, it seems reasonable to reply to the case that they have made.

Mr. Deputy Speaker: Order. I should be obliged if the right hon. Gentleman would deal only with what is in the Bill.

Mr. Howell: I am certainly dealing with what is in the Bill, Mr. Deputy Speaker, or at least with the points which have been made on Third Reading. I am dealing with each point which has been made. I shall conclude this part of my argument quickly.
If the kind of thinking that we have heard from the hon. Member for Merioneth were carried to its logical conclusion and got the reaction that I predicted, it would deny Wales massive investment and rateable value which the water industry provides for the Principality. It is important to put that on record.
This modest Bill has been exhaustively examined. It is interesting that it came unscathed from the Committee and was reported to the House unamended. Despite the fact that it was an extremely involved Bill, its provisions were found on examination to be sound and unassailable. The Bill may have to be amended elsewhere in accordance with the guarantees that I have given. If so, we shall no doubt have a further opportunity to discuss the Bill when it comes back to this House on its final course.
I commend the Bill to the House. It represents simple equity and justice which the imposition of the provisions of the Water Act on a large number of people in this country certainly justify.

Mr. Arthur Jones: I do not think that the Minister of State was correct. We had nine meetings in Committee, not eight.

Mr. Denis Howell: I said nine.

Mr. Jones: I beg the right hon. Gentleman's pardon. At the sixth sitting the right hon. Gentleman, announcing that it would not be possible to implement the Bill for the next financial year, said:

The Secretary of State and I have reluctantly had to conclude that it will not be possible to get the Bill on the statute book in time to present an order to Parliament for the effects of the Bill to be implemented for the financial year 1977–78.
Then, in a most revealing remark, the right hon. Gentleman said:
The Government very much regret that situation, which has been brought about by the lack of expedition with which we have applied our minds to these matters."—[Official Report, Standing Committee B, 17th February 1977; cc. 307–8.]
That reflects the circumstances in which the right hon. Gentleman allowed himself to be put.
What, in fact, he did was to try to introduce this legislation too late in the day to give it a reasonable chance of full discussion. It is no real credit to say that the Bill came back unamended. I recall that when we had Divisions the right hon. Gentleman, quite properly, saw that his side of the Committe was Whipped. That is how the Bill got through unscathed. We did not vote the same way all the time, as Labour Members did.
It is therefore no credit to say that the Bill came through unscathed. In fact, the argument was won on a number of occasions by my right hon. and lion. Friends. The right hon. Gentleman has yet to answer the rate support grant objection. I am glad that the Secretary of State has joined—

Mr. Deputy Speaker: Order. What may or may not have happened in Committee is not now relevant to what is in the Bill.

Mr. Jones: I am referring now to the rate support grant amendment that we have been discussing this evening. I hope that it is in order to refer to that.

Mr. Deputy Speaker: So far as I can recall, it is not in the Bill.

Mr. Jones: I thought that in his remarks the right hon. Gentleman was mentioning what was omitted from the Bill. I know, Mr. Deputy Speaker, that you called the right hon. Gentleman to order when he referred to water storage in Wales and said that arrangements would be made by the regional water authorities in England if the Welsh nationalists pursued their policies in this respect.
I feel myself that this is a minor Bill, but its purpose is questionable, particularly in terms of the lateness of its presentation in the House and the prospect of a major water Bill. It was said that we should have a White Paper in the early spring, but perhaps it is such a contentious measure that will be contested very seriously, that it, too, will be delayed.
Equalisation arrangements such as these strike at the roots of qualitative management and the comparative efficiency of one water authority against another, as well as the records of the private water companies. In that respect the measure is widely considered to be a dis-service to the water industry. It has been said with some justification that the subject was tied to devolution. Indeed, the remarks of the Secretary of State for Wales are an indication that devolution proposals were partially responsible for this measure.

Mr. D. E. Thomas: rose—

Mr. Arthur Jones: I shall give way in a moment. The very fact that the right hon. and learned Gentleman felt that he should engage himself so earnestly and noisely in the debate this evening is an indication that his anxiety for devolution was equal to his concern for the partial equalisation of water charges.
All the endeavours that Opposition Members have made have been directed towards improving the Bill. Some useful suggestions have been made—[Interruption]. Labour Member are denying that, but their copybook is not blotless in that respect. One cannot be right every time. I would have thought that the Minister would have been wise to give way once or twice on some of the propositions that we submitted, because there is no credit in winning every time. The right hon. Gentleman continually refers to the support that there is for the Bill in some parts of the House. He will be the first to recognise that the support comes mainly from those who will benefit. One usually receives support from those who will benefit from an arrangement.
The Minister was wrong to chide my hon. Friend the Member for Walsall, North (Mr. Hodgson) for being the only Members in the Chamber who spoke against the Bill who would be in a position to benefit from the Bill. The right

hon. Gentleman knows that I am in the area of the Anglian Water Authority myself. I am against the philosophy behind the Bill, as opposed to trying to accept the immediate benefits flowing from it which fundamentally are misguided.
The acrimony that has been evident since some senior members of the Government arrived tonight does not reflect the relationship that we enjoyed in Committee. Senior Ministers are trying to pump poison into that relationship.

Mr. D. E. Thomas: The hon. Gentleman said earlier that the Bill would militate against the whole principle of the efficient running of the water authorities. Is he seriously suggesting that the reorganisation of the water authorities promulgated by the Tory Government has brought about efficiency and that the 46 per cent. differential in the cost of water in Wales indicates efficiency on the part of the Welsh National Water Development Authority?

Mr. Jones: I do not want to make a judgment on the efficiency or otherwise of the Welsh authority. As regards the reorganisation of the water cycle, there is very little criticism anywhere of the sound common sense and the improved arrangements that lie behind the reorganisation of water supply. The placing of water supply and sewage disposal under one authority has been a very enlightened development. There is little disagreement between the two sides of the House about this. It is recognised to have been a major step forward. In a situation in which so much water is re-cycled, equalisation must militate against individual efficiency of management and not give the relative comparisons that are desirable.
I want to conclude in a vein which is not critical and hypersensitive. I have thoroughly enjoyed the proceedings on the Bill. I believe that in general the right hon. Gentleman has as well. Some of the remarks that have been made tonight have given quite the wrong impression of what I consider to have been a very useful exercise in examining carefully the proposals in the Bill.
Although we are against the Bill in principle, we shall not be dividing the House. That news will be received with joy by those who have remained. This is an unfortunate measure. It should


have been rolled up in the major legislation which it is proposed to bring forward in a few months' time. We shall have to see to what extent the Bill is altered by those arrangements.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Orders of the Day — DRUGS (ADVERSE EFFECTS)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Snape.]

1.24 a.m.

Mr. Sydney Tierney: My subject for this Adjournment is the reporting of the adverse side effects of drugs. While the Department of Health and Social Security has overall responsibility for the reporting of adverse reactions, the Committee on the Safety of Medicines—a Government agency—advises the Minister on the safety, the quality and the efficacy of individual drug products for human use. The committee is also responsible for collecting and investigating reports of adverse reactions to drugs already on the market.
The pharmaceutical industry is bound by law to report adverse reactions. A scheme of voluntary reporting by doctors on a yellow card reporting system operates at present. Doctors are asked to record suspected adverse reactions on a yellow card and forward them to the Committee on the Safety of Medicines.
Since the system was established in 1964, it has been recognised increasingly that under-reporting is a major defect, and this is causing concern. For more than 10 years the Committee on the Safety of Medicines has been examining ways of supplementing the yellow card system because that system was not picking up the warning signs early enough.
There is little doubt that the Eraldin tragedy has revealed the serious underlying defects in the reporting system and brought a renewed urgency into the search for an effective system. It is important to strike the correct balance between failing to warn early enough and warning too early, and thus frightening

people off. A difficult act of judgment is required in a delicately balanced situation, and everyone agrees that any scheme depends on the willingness and efficiency of doctors who must operate it.
The major problem is to find a scheme which will command the co-operation of the doctors, because their co-operation is vital. The present system does not command their support, and the very serious defects of that are apparent. The annual report of 1975 of the Medicines Commission, in an apparent rap over the knuckles for GPs, said that the fact that Eraldin induced eye damage first came to light as a result of a letter in the Medical Journal. The report went on:
Prior to this, only one adverse report had been received by the Committee over a period of nearly three years. Subsequent to the publication more than 200 cases of eye damage were reported retrospectively. This illustrates the great importance of reporting early suspicions.
Later, reports of skin rashes, deafness and sclersing peritonitis, a serious stomach complaint, appeared, and in 1975 it was established that there were a number of serious adverse reactions from Eraldin. The drug was withdrawn in July, 1975, and 12 months later the committee sent out a directive reminding doctors that Eraldin was restricted to certain hospitalised patients only. In the directive the committee said it could not be sure that the restrictions were being observed, and it told the doctors again that the drug had been withdrawn.
There was a good cause for such uncertainty. The drug was withdrawn, as I have said, in July, 1975, and in July last year—a year after withdrawal—I received a letter from an Eraldin sufferer in Birmingham who was still taking the drug, 12 months after it was banned. His prescription was renewed without his seeing the doctor. He discovered the facts from his chemist who queried whether he should be taking the drug.
In June the chemists's stocks ran out, and he told this man he would have to get a new prescription. It seems that chemists will continue to prescribe until their stocks run out, even though the drug has been withdrawn. It also seems to us that there are chemists who will not inform a doctor who is making a mistake with his prescription.
The patient, as suggested by the chemist, duly informed his local medical


centre in June 1976 about the ban on the drug. I raised this case in the House on 6th August last year. On 11th August, five days later, he received a further prescription for Eraldin—I have a copy of the prescription dated 11th August 1976. It was said in the debate on 6th August that an inquiry would be made into the case. Up to now the individual concerned has received no help or advice from anyone.
Only a couple of hours ago my hon. Friend the Member for Rochester and Chatham (Mr. Bean), who has constituents suffering from adverse reactions, asked me if Eraldin had been withdrawn. I told him that it was banned from general use in July 1975. He informed me that he believes that one of his constituents received a prescription for the drug only last week, and if that turns out to be correct, it constitutes a most serious situation.
We have seen that there are serious defects in the communication system operated as well as in the reporting of adverse reactions. As Dr. William Inman, a principal medical officer at the Committee on Safety of Medicines' headquarters, pointed out at a conference in April 1976, even when adverse reactions are suspected, under-reporting can still occur, and he listed what he called the "seven deadly sins" of doctors in respect of reporting adverse side effects.
Dr. Inman listed them as follows: first, complacency, the mistaken belief that only safe drugs are marketed; second, fear of litigation; third, the guilt about damage to patients; fourth, the ambition of certain doctors to publish a personal series of cases; five, ignorance about what should be reported; six, diffidence about reporting mere suspicions; seven, plain old-fashioned lethargy. One can well understand the human dilemma of doctors in some of these circumstances, if not all, but ways must be sought to establish their fullest co-operation to make any agreed system work in a more efficient manner, which is of paramount importance.
As I have said, there is little doubt that the Eraldin experience introduced a sense of urgency and deep concern to the situation. I was informed by the Minister of State in November last year that the Committee on Safety of Medicines had agreed to set up a research panel of

experts to study the basic mechanism of the Eraldin syndrome. It is known that the Medicines Commission is considering issues raised by the Eraldin experience, and it is intended that some recommendations to improve the situation will be forthcoming in 1978.
I welcome the setting up of a select panel if it means that the medical profession is to put its house in order, but it seems to me that it is in a unique position if it can have an investigation of its own shortcomings and act as judge and jury within the situation. The patients, the members of the public who use the drug and consequently are dangerously exposed to adverse reactions, must be very much involved.
Who is going to consult them? Who is ready to receive representations on behalf of Eraldin sufferers? Who is ready to draw upon the valuable information gained from hundreds of reported cases compiled by action groups, solicitors and hon. Members? Surely it would be criminal folly to ignore such a source of evidence and information in attempting to deal with the problem.
I refer again to Dr. Inman. He confirms our own findings that even when adverse reactions are suspected they are still not reported. There are hundreds of cases that have never been reported. They are being found with the help of the Press, and I pay tribute to the Press in Birmingham, which has helped us in our campaign. These people have been found with the help of those outside the medical profession. The West Midlands-based action group, of which I am the chairman, has received over 800 letters from Eraldin sufferers, most of whom have been altered by radio or Press reports, not by the medical profession. This has occurred in different parts of the country. In fact, sufferers have reported their own side effects to people outside the medical profession—that is to Members of Parliament and other individuals who are involved in the campaign.
There must be doctors who have treated patients with Eraldin and are now treating them for some adverse reaction, with the patients remaining unaware of the cause of the side effect. If my hon. Friend agrees with us that these individuals have a right to be informed he should take what action is available to


him to get the fullest co-operation from the medical profession to establish the total number of people who are involved with the Eraldin problem.
I have the greatest respect for the public confidence which exists between the medical profession, the drug manufacturers and patients. The quickest way to destroy that confidence is to appear to be lethargic about establishing the truth of the Eraldin tragedy. Pressure is growing all the time. Many eminent people in the medical profession are raising the question of the extent of adverse reaction to drugs.
The Committee of Professors of Clinical Pharmacology and Therapeutics, in evidence to the Royal Commission, said that the evidence of adverse reactions in drugs is unacceptably high. The manufacturer of the drug—ICI—-is still unsure and is still trying to discover the extent of the adverse action to the drug. For some months ICI has stated that 800 people have made claims upon its compensation fund, and that 200 cases have been settled. Last week, at the company's annual meeting, the head of research, Dr. Alfred Spinks, was reported as saying that there were now 1,000 claims, with 300 settlements, and that this could now cost the company up to £9 million in compensation payments.
Undoubtedly the company has accepted that the numbers are higher than its original estimates. I can inform the company that in the past three weeks, after some limited publicity, we have received 200 letters. I receive such letters every day. I received six today. In any area where publicity is given to the effects of Eraldin we get a spurt of correspondence from individuals who, until they read about it in the Press or heard about it on the radio, had no idea that they were affected.
I can put it to ICI that the figure of 1,000 claims will soon be passed because our campaign is succeeding. What ICI and all the other authorities involved must accept, and this includes the Department especially, is that the numbers will continue to grow for a long time yet and that the full seriousness of the Eraldin tragedy will have to be faced sooner or later.
If proper representation for Eraldin adverse reaction sufferers is to be made, if patients generally are to be involved as the people who are dangerously exposed, if the valuable information gained from hundreds of reported cases compiled by the West Midlands action group and others is to be used, if the special knowledge gained by solicitors and by hon. Members in dealing with constituents is to be taken advantage of, if we are to find hundreds of cases which have never yet been reported, and we feel that there are still some few hundred people who are suffering from side effects and are unaware of it, if we are to determine to what extent the drug is still being used and whether it has been completely withdrawn from all stocks, there must be a full and independent inquiry. That is the only way to deal with the matter.
The fullest opportunity can be given for patients and others outside the medical profession to make valid and useful contributions. There is a great need for public participation. In an age when we are always talking about democratic participation in industry and elsewhere, there is need for public participation in the operations and activities of the medical profession, particularly in the realm of drugs. That is the only way to ensure justice and fair treatment for all and to ensure the public confidence is maintained.
Those of us who are involved in this campaign have no wish to vilify anyone, because we understand the delicacy of this most difficult situation. All that we wish to do is to see that the facts are fully faced and the lessons are learned. I appeal to my hon. Friend to set up a fuller and wider inquiry to ensure that the grave problem of reporting drug adverse reactions is more adequately dealt with—and quickly.

1.42 a.m.

The Under-Secretary of State for Health and Social Security (Mr. Eric Deakins): I am most grateful to my hon. Friend the Member for Birmingham, Yardley (Mr. Tierney) for raising this important subject this evening. The safety of medicines affects us all and there is increasing recognition that effective modern medicines carry risks which may be serious in a proportion of patients. This has, I know, led to concern amongst hon. Members


and in the country at large about the safety of drugs and about the detecting of adverse side effects to drugs. I hope that I can do something this evening to allay this proper concern.
I cannot in the short time available to me in this debate give a full account of the highly devoloped arrangements we have in the United Kingdom for the control of medicines, but I hope to be able to explain to the satisfaction of the House a vital part of those arrangements—the system for detecting and dealing with adverse reactions to medicines. I can assure my hon. Friend that all concerned—Ministers, their expert advisers, the medical, dental and pharmaceutical professions and the pharmaceutical industry—are anxious to do everything possible to improve that system. In this connection, I shall draw to the attention of the recently-established panel of experts the detailed points made by my hon. Friend. There is no doubt that we must have the best possible system for the effective monitoring of serious or unexpected reactions to medicines if we are to ensure that the risks inherent in modern medicines are reduced to the minimum.
The legislative background to the system for detecting adverse reactions to medicines is provided by the Medicines Act 1968, a comprehensive measure under which the Committee on Safety of Medicines, mentioned by my hon. Friend, advises Ministers on the safety, quality and efficacy of medicinal products. Control of medicines is exercised in three main stages: first, before a drug is tested in man; secondly before it is licensed for marketing; and finally through continuous surveillance once it is on the market. A drug which showed unacceptable levels of toxicity in animals or in human clinical trials would not be given a licence.
None the less it cannot be emphasised too strongly that, however effective this control is, there will always be times when adverse reactions to a drug become apparent only after it is in widespread use. The committee therefore has a statutory duty to promote the collection and investigation of information relating to adverse reactions and advises on the most effective post-marketing surveillance possible. At present the surveillance system relies largely on the spontaneous, voluntary and confidential reporting by doctors and dentists of suspected adverse

events which are then recorded in a register of adverse reactions established by the committee. Additional data may come from companies marketing a medicinal product, which are bound by law to maintain records of any harmful side effects which come to their attention. Other sources include the Registrar-General, coroners, the World Health Organisation, other drug regulatory authorities, and articles in the professional journals. The committee itself undertakes a number of epidemiological monitoring programmes to supplement the reports it receives.
As I have already indicated, the purpost of the post-marketing surveillance system is to collect and evaluate reports of suspected adverse reactions: it is not designed to establish the precise incidence of reactions. It is often referred to as the yellow card system, as all doctors and dentists in the country are provided with yellow cards on which to make confidential reports of suspected reactions. These account for 75 per cent. of the reports received. A full-time medical staff at the Department's headquarters and 80 part-time doctors throughout the country are employed to investigate the individual reports and to help evaluate whether reported events were due to a particular drug, to the underlying condition being treated or to some other cause. Feedback is important. Every doctor reporting or inquiring about a suspected adverse reaction is given information about the drug in question and related drugs.
Once an association between a medicinal product and a serious adverse event has been established, its gravity and the usefulness of the drug will determine the course of action taken. The manufacturer may be required to modify the product literature or the committee may give warning of the possible hazard, either in one of its leaflets entitled "Current Problems" or in a specific letter to doctors. In more serious cases, the committee may issue an emergency warning leaflet or advise that the drug be removed from the market. In addition, the committee publishes the findings from its studies in the scientific journals.
We can, I think, fairly be proud of the system, which has an international reputation. It has been the model for many other countries and has been a major


contributor to the WHO system. Some hon. Members may have seen the letter in The Lancet of 5th February from the German Physicians Centre pointing out that the German approach closely follows ours and suggesting that the system of the Committee on Safety of Medicines ranks first among national centres both in number of reports and quality of evaluation. It also made the valid point that no such administrative measure can be effective unless the doctors concerned are alert to and report possible unexpected events and effects.
An illustration of the operation of the system can perhaps be found in the reporting of suspected reactions to oral contraceptives. Through the reports made to the committee it was possible to establish that increased risk of thromboembolic disease was related to the level of oestrogen content of "the pill" rather than to differences in chemical composition. That finding was made on the basis of what was clearly only a proportion of possible reports but it enabled appropriate advice to be given to the professions, which resulted in a major change in prescribing practice.
A further example of the operation of the system can be seen in the history of the drug practolol. The case of this drug is one that has caused disquiet, not least to my hon. Friend. As he knows from his intensive study of the circumstances, practolol had undergone stringent testing before being marketed for heart disease in 1970. Four years later, after widespread clinical use, it was associated with a number of serious side effects, affecting the eyes, ears, skin and internal organs. Many of the individual symptoms associated with it occur spontaneously. Once the attention of doctors had been drawn to the association extensive and prompt reporting to the committee followed. Many reports concerned symptoms which doctors had seen earlier but had not recognised as being causally linked with practolol. The yellow card reporting system proved invaluable in demonstrating the gravity of the unforeseen and unpredictable practolol syndrome, and contributed significantly to the appropriate action which was taken on it.
A disturbing feature of the practolol case, however, was the time which elapsed

before reports of suspected reactions were made to the committee; and it is widely believed that the main weakness of the system lies in a considerable degree of under reporting. That is not because the scheme does not command the support of doctors. There are a number of reasons why doctors do not always send in possible reports. It is often difficult to recognise an association between a suspicious event and a particular medicine, since the symptoms could well have been spontaneous or the patient may have been taking more than one drug. Commonly, individual doctors see only isolated cases and so may not relate the reaction to a drug they do not prescribe widely. In some instances doctors do not make a report because they regard a reaction as being sufficiently well known or they may fear that a useful drug's reputation would be damaged unjustifiably.
Then, too, we must accept that doctors are busy men, and dealing with patients may take precedence over sending in a report. These features do not negate the value of the system. As I have said, its purpose is not to establish incidence, but to provide a pattern of reactions which may be significant in enabling the committee to give an early warning hazard. Nevertheless, doctors are urged to report all cases of suspected reactions and not to wait until a link has been established. I am sure the committee would agree that doctors must be suspicious. They must expect the unexpected.
Ever since the Committee on Safety of Drugs—the predecessor of the Committee on Safety of Medicines—was established in 1963, attempts have been made to improve the operation of the system. Successive Ministers and chairmen of the committees have stressed the importance of close liaison between the medical and dental professions and the committees. Recent steps to promote collaboration include the introduction of a new series of leaflets, "Current Problems", to which I referred earlier, designed to draw attention to problems which do not warrant the issue of an emergency warning leaflet. A revised version of the yellow card has been sent to all doctors twice in the last year and a reminder of the need to report has been included in the prescription pads. Products have been marked as "Recently Introduced" in the Monthly


Index of Medical Specialities and this also drew doctors' attention to the need to report to the committee all details of suspected adverse events. A similar reminder is included in the Data Sheet Compendium issued by the Association of the British Pharmaceutical Industry.
In December 1976, the vice-chairman of the committee, Sir Theo Crawford, wrote to all doctors to say that while the committee did not consider there was immediate cause for concern, it wished to stress the importance of reporting all suspected adverse events occurring to patients treated with beta adrenoceptor blocking agents. It is notable that as a result of all these measures there has been a marked rise in the number of reports, particularly in the last quarter of 1976.
While we recognise the value of the present arrangements, I should like to assure the House and my hon. Friend that neither the Department nor its expert advisory bodies are complacent about what is being achieved through the yellow cards. The reporting system is under continuous review and the committee is at present considering ways of supplementing it. For example, certain new drugs might be placed on a special list which would ensure that doctors could prescribe them only if they were prepared to submit records on their use. Other proposals for improved monitoring have been put forward by interested bodies such as the Association of the British Pharmaceutical Industry and the Committee of Professors of Clinical Pharmacology and Therapeutics. These will all be taken into account by the Committee on Safety of Medicines in reaching its conclusions. Practicable conclusions must, of course, have regard to financial constraints, and need to be discussed with the professions and other interested parties,

and possibly tested in pilot studies, before they can be adopted. It should not be thought that patients are unnecessarily exposed to risk while these possible measures are considered. Every new drug is individually considered by the committee and where appropriate the committee advises marketing under restricted conditions.
In conclusion, I must remind my hon. Friend that it is not easy to recognise drug reactions, or to establish, without very costly studies, what is the precise incidence of an adverse reaction. Society must accept that in the present state of knowledge powerful drugs may occasionally produce adverse reactions, and it is for doctors to weigh the possible risks against the anticipated benefit from treatment. Some hazardous drugs are lifesaving and their total removal from the market may not be in the best interests of certain patients. Nor must controls be so tight as to prevent innovation in medicine. The essential requirement is to ensure that the measures we take to detect, and warn the profession about, possible hazards are speedy and effective.
In the first place, we must rely on doctors and dentists to report events related or possibly related to medicines; and I urge them to be vigilant and active in this. Without the constant vigilance of the professions and their active participation in the reporting system—in short, without the vital data—the committee cannot give its advice. Given the help of the professions, the committee will, I am sure, continue to fulfil its role in this vital system for monitoring medicines.

Question put and agreed to.

Adjourned accordingly at seven minutes to Two o'clock.